KBRA Assigns AA+/Stable Rating on the State of Wisconsin General Obligation Bonds of 2017 Series B

NEW YORK--()--Kroll Bond Rating Agency (KBRA) has taken rating actions to the following State of Wisconsin Bonds.

Ratings      

Issuer:                     State of Wisconsin

Series/Bond     Rating   Outlook   Action   Amount
General Obligation Bonds of 2017, Series B     AA+   Stable   Assigned   $277.7 million
General Obligation Bonds (GO)     AA+   Stable   Affirmed   $5.3 billion
Master Lease Certificates of Participation (COPs)     AA   Stable   Affirmed   $116.2 million
GO Commercial Paper (CP) Program     K1+       Affirmed   $507 million
GO Extendible Municipal Commercial Paper (EMCP) Program     K1+       Affirmed  

KBRA last published a report updating its rating of Wisconsin’s GO bonds on October 18, 2017. At that time, in addition to speaking with state officials, KBRA reviewed the State’s new Annual Fiscal Report (budgetary basis) which was released on October 16, 2017; reviewed the State’s most recent Audit of the Wisconsin Retirement System which was released on September 28, 2017; and also reviewed the State’s 2017-2019 Biennium budget which was adopted on September 21, 2017. This KBRA report is substantially the same as the October 18 report except for minor updates related to the State’s having provided new information regarding the first two months of Fiscal 2018. KBRA notes that this information indicates the State’s net receipts, disbursements, and cash flow are tracking very close to expectations and budget.

Meanwhile, KBRA’s October 18, 2017 rating upgrade of the State’s GO rating to AA+ from AA reflects, among other observations, that in recent years Wisconsin has consistently and accurately budgeted within its means and has prioritized a combination of tax, spending, and debt restraints that have improved the State’s reserves and liquidity. The State has also simultaneously pursued policies to stabilize and reduce historically high tax burdens. Meanwhile, the economy as measured by employment and income indicators, continues to grow at a healthy pace. These factors combined with the State’s large and fully funded pension system (which increasingly makes Wisconsin a positive relative outlier on the landscape of States and other large municipalities) have improved the State’s operational and financial flexibility. Wisconsin recently adopted a 2017-19 biennium budget that reflects this improved flexibility. In this budget the State has chosen to make sizable but affordable increased investments in transportation, education, and other policy priorities while also prioritizing financial reserves and holding the line on taxes.

The long-term rating on the State’s general obligation bonds is based on KBRA’s U.S. State General Obligation Rating Methodology

The short-term ratings on the State’s CP and EMCP programs are derived from the State’s long-term general obligation rating and also reflects the State’s strong liquidity, history of market access, and prior authorization to retire all CP and EMCP Notes with long term bonds. For mapping of the long-term rating to the short-term rating, please refer to the short-term KBRA Rating Scale.

The Master Lease COPs rating is based on the State’s long-term general obligation rating and evaluation of the factors discussed in KBRA’s U.S. State Annual Appropriation Obligation Rating Methodology.

To access the full report, click here.

About Kroll Bond Rating Agency

KBRA is registered with the U.S. Securities and Exchange Commission as a Nationally Recognized Statistical Rating Organization (NRSRO). In addition, KBRA is recognized by the National Association of Insurance Commissioners (NAIC) as a Credit Rating Provider (CRP).

Contacts

Kroll Bond Rating Agency
Analytical:
William Cox, Managing Director
(646) 731-2472
wcox@kbra.com
or
Patricia McGuigan, Associate Director
(646) 731-3350
pmcguigan@kbra.com
or
Alice Cheng, Associate Director
(646) 731-2403
acheng@kbra.com

Contacts

Kroll Bond Rating Agency
Analytical:
William Cox, Managing Director
(646) 731-2472
wcox@kbra.com
or
Patricia McGuigan, Associate Director
(646) 731-3350
pmcguigan@kbra.com
or
Alice Cheng, Associate Director
(646) 731-2403
acheng@kbra.com