KBRA Affirms AA+ Rating for State of Illinois Build Illinois Bonds (Sales Tax Revenue Bonds), Junior Obligation; Outlook is Stable
8 Aug 2023 | New York
KBRA affirms the long-term rating of AA+ with a Stable Outlook for the State of Illinois Build Illinois Bonds (Sales Tax Revenue Bonds), Junior Obligation.
A surveillance report will follow shortly.
Key Credit Considerations
The rating was affirmed because of the following key credit considerations:
- Security provisions are strong and include a priority lien on the State sales tax revenues after payment of senior bonds, a continuing appropriation requirement, and strong non-impairment language.
- Additional bonds test (ABT) requires 10.2x coverage of MADS, which significantly restricts the potential to overleverage.
- Expansive and diverse state-wide sales tax base provides extraordinary coverage of over 45.8x MADS for combined senior and subordinate Bonds.
- Bonds are secured by sales taxes, which may at times be adversely affected by economic factors. Nevertheless, strong coverage levels and a highly restrictive ABT insulate outstanding Bonds from associated risks.
- Continued adoption of on-time budgets, maintenance of manageable debt levels, and growth in pledged revenue collections.
- While unlikely, an instance wherein the State leverages debt levels to the ABT in combination with an extremely significant economic downturn that results in a sharp reduction in State sales tax revenues.
To access rating and relevant documents, click here.