Press Release|Public Finance
KBRA Affirms BBB+ Rating for Board of Education of the City of Chicago, Dedicated Capital Improvement Tax Bonds; Outlook is Stable
15 Feb 2024 | New York
KBRA affirms the long-term rating of BBB+ with a Stable Outlook for the Board of Education of the City of Chicago, IL Dedicated Capital Improvement Tax ("CIT") Bonds.
Key Credit Considerations
The rating was affirmed because of the following key credit considerations:
Credit Positives
- Under the CIT Act, a dedicated property tax levy is authorized for payment of CIT bonds.
- Under the Indenture, the Board covenants to extend the CIT levy in an amount sufficient to provide at least 1.10x annual debt service in every year.
- The Board’s strengthened financial position as well as the Consolidated Debt Service Reserve Fund, which provides additional debt service coverage.
Credit Challenges
- The nexus between Chicago Public Schools ("CPS") and the CIT Bonds, as KBRA believes the credit position of the CIT Bonds is tied to the overall credit position of CPS.
Rating Sensitivities
For upgrade
- Improved credit profile of the CPS, as KBRA believes there is a nexus between this credit and the CPS, as they both share the same management team and resource base.
For downgrade
- Declining credit profile of CPS.
- Draws on Consolidated Debt Service Reserve Fund without replenishment.
To access rating and relevant documents, click here.