KBRA Revises Chicago’s Long-Term GO Bond Rating to A from BBB+ with a Stable Outlook

NEW YORK--()--Kroll Bond Rating Agency (KBRA) has upgraded the City of Chicago long-term general obligation bond rating to A from BBB+ with a Stable Outlook. The rating revision to A from BBB+ for the City’s general obligation bonds reflects the following factors in combination:

  • Effective City management that was able to secure State legislative reforms that set in motion a path to fiscal solvency for the City’s four pension plans, despite obstacles presented by gubernatorial vetoes, adverse court rulings, and a State Constitution that is highly favorable to the rights of pensioners.
  • KBRA research which demonstrated our view that the City’s wealth base has the capacity to support significant funding increases needed to achieve actuarial funding for the four pension funds.
  • City management’s role in favorably influencing the State administration by advocating pension reforms and “hold harmless” state aid provisions that have benefitted the Chicago Board of Education.

Please see our report “Chicago’s Pension Liabilities: A Look Beyond Headlines and Ratios” for additional information.

 
Ratings

Issuer:  City of Chicago, IL

Series/Bond     Rating     Outlook     Action
General Obligation Bonds     A     Stable     Upgrade

KBRA’s long-term ratings do not apply to bonds backed by a letter of credit or liquidity facility, unless otherwise noted.

This rating is based on KBRA’s U.S. Local Government General Obligation Rating Methodology. The rating determinants, as well as KBRA’s corresponding rating determinant ratings for the general obligation bonds, are summarized below:

  • Governance and Management Structure and Policies: AA+ (revised from AA)
  • Municipal Resource or Economic Base: AA
  • Debt and Additional Continuing Obligations: BBB
  • Financial Performance and Liquidity: A+ (revised from A)

Related Publications: (available at www.kbra.com)

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About KBRA and KBRA Europe

KBRA is a full credit rating agency 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). KBRA Europe is certified and registered with the European Securities and Markets Authority (ESMA).

Contacts

Analytical Contacts:
Kroll Bond Rating Agency
Harvey Zachem, 646-731-2385
Managing Director
hzachem@kbra.com
or
Karen Daly, 646-731-2347
Senior Managing Director
kdaly@kbra.com
or
Alice Cheng, 646-731-2403
Associate Director
acheng@kbra.com

Contacts

Analytical Contacts:
Kroll Bond Rating Agency
Harvey Zachem, 646-731-2385
Managing Director
hzachem@kbra.com
or
Karen Daly, 646-731-2347
Senior Managing Director
kdaly@kbra.com
or
Alice Cheng, 646-731-2403
Associate Director
acheng@kbra.com