Press Release|Public Finance

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:

Credit Positives

  • 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.

Credit Challenges

  • 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.

Rating Sensitivities

For Upgrade

  • Continued adoption of on-time budgets, maintenance of manageable debt levels, and growth in pledged revenue collections.

For Downgrade

  • 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.


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