-

KBRA Assigns AA+ Rating to State of Illinois, Build Illinois Bonds (Sales Tax Revenue Bonds), Junior Obligation Series A, B, and C of March 2025; Affirms Parity Debt; Outlook is Stable

NEW YORK--(BUSINESS WIRE)--KBRA assigns a long-term rating of AA+ with a Stable Outlook to the State of Illinois (the "State"), Build Illinois Bonds (Sales Tax Revenue Bonds), Junior Obligation Series A, B, and C of March 2025 (the "Bonds"). KBRA additionally affirms the long-term rating of AA+ with a Stable Outlook for the State of Illinois' outstanding parity Build Illinois Bonds (Sales Tax Revenue Bonds), Junior Obligation.

KBRA’s Stable Outlook reflects the ample coverage of junior obligation debt service (69.8x for fiscal year 2024), supported by a broad-based, statewide source of sales tax revenues. The Outlook further reflects KBRA’s expectation that pledged sales tax revenues will continue to grow at a modest pace maintaining ample coverage of Build Illinois Bond obligations, and that future debt issuance authorized under the Build Illinois Bond Act will not materially dilute coverage levels.

Key Credit Considerations

The rating action reflects the following key credit considerations:

Credit Positives

  • Security provisions are strong and include a priority lien on State sales tax revenues after payment of senior lien Build Illinois Bonds, a continuing appropriation requirement, and strong non-impairment language.
  • The Bonds’ additional bonds test (ABT) requires 10.2x coverage of maximum annual debt service on combined debt outstanding, which significantly restricts the potential to overleverage.
  • Expansive and diverse statewide sales tax base that has historically provided extraordinary coverage. For the past five fiscal years, debt service coverage has ranged from 30x-46x on combined senior and junior Build Illinois Bond obligations' annual debt service.

Credit Challenges

  • The Bonds are secured by sales tax revenues, which can at times be adversely affected by economic factors, although the strong coverage levels and highly restrictive additional bonds test (ABT) helps insulate the Bonds from associated risks.

Rating Sensitivities

For Upgrade

  • Accelerated growth in pledged revenue collections, coupled with manageable debt levels.

ESG Considerations

For Downgrade

  • While unlikely, an instance wherein the State leverages debt levels to the ABT, in combination with a substantial economic downturn contributing to a sustained, sharp reduction in State sales tax revenues.

To access ratings and relevant documents, click here.

Methodologies

Disclosures

A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining the credit rating is available in the Information Disclosure Form(s) located here.

Information on the meaning of each rating category can be located here.

Further disclosures relating to this rating action are available in the Information Disclosure Form(s) referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com.

About KBRA

Kroll Bond Rating Agency, LLC (KBRA), one of the major credit rating agencies (CRA), is a full-service CRA registered with the U.S. Securities and Exchange Commission as an NRSRO. Kroll Bond Rating Agency Europe Limited is registered as a CRA with the European Securities and Markets Authority. Kroll Bond Rating Agency UK Limited is registered as a CRA with the UK Financial Conduct Authority. In addition, KBRA is designated as a Designated Rating Organization (DRO) by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized as a Qualified Rating Agency by Taiwan’s Financial Supervisory Commission and is recognized by the National Association of Insurance Commissioners as a Credit Rating Provider (CRP) in the U.S.

Doc ID: 1008319

Contacts

Analytical Contacts

Lina Santoro, Director (Lead Analyst)
+1 646-731-1419
lina.santoro@kbra.com

Peter Scherer, Senior Director
+1 646-731-2325
peter.scherer@kbra.com

Karen Daly, Senior Managing Director (Rating Committee Chair)
+1 646-731-2347
karen.daly@kbra.com

Business Development Contacts

William Baneky, Managing Director
+1 646-731-2409
william.baneky@kbra.com

James Kissane, Senior Director
+1 646-731-2380
james.kissane@kbra.com

Kroll Bond Rating Agency, LLC

Details
Headquarters: New York City, New York
CEO: Jim Nadler
Employees: 400+
Organization: PRI

Release Versions

Contacts

Analytical Contacts

Lina Santoro, Director (Lead Analyst)
+1 646-731-1419
lina.santoro@kbra.com

Peter Scherer, Senior Director
+1 646-731-2325
peter.scherer@kbra.com

Karen Daly, Senior Managing Director (Rating Committee Chair)
+1 646-731-2347
karen.daly@kbra.com

Business Development Contacts

William Baneky, Managing Director
+1 646-731-2409
william.baneky@kbra.com

James Kissane, Senior Director
+1 646-731-2380
james.kissane@kbra.com

Social Media Profiles
More News From Kroll Bond Rating Agency, LLC

KBRA Assigns Preliminary Ratings to BMO 2026-C14

NEW YORK--(BUSINESS WIRE)--KBRA is pleased to announce the assignment of preliminary ratings to 16 classes of BMO 2026-C14, a $631.6 million CMBS conduit transaction collateralized by 27 commercial mortgage loans secured by 89 properties. The collateral properties are located throughout 36 MSAs, of which the three largest are Norfolk (8.8% of pool balance), Detroit (8.7%), and Albany-Schenectady-Troy, NY (8.7%). The pool has exposure to most major property types, with four types representing mo...

KBRA Releases Research – Private Credit: 2026 Outlook

NEW YORK--(BUSINESS WIRE)--KBRA releases research that considers the themes that matter for private credit in 2026. KBRA believes 2026 will be a pivotal year for the broader private credit landscape. We expect strong growth across a wide range of rated private credit entities and transactions, offering global investors an increasing set of fixed income pathways into private markets. These pathways provide not only predictable income, but also the ability to tailor risk exposure relative to the...

KBRA Assigns Preliminary Ratings to OBX 2026-NQM2 Trust

NEW YORK--(BUSINESS WIRE)--KBRA assigns preliminary ratings to 14 classes of mortgage-backed notes from OBX 2026-NQM2 Trust, a $809.8 million non-prime RMBS transaction. The underlying collateral, comprising 1,553 residential mortgages, is characterized by fixed-rate mortgages (FRMs) and hybrid adjustable-rate mortgages (ARMs) making up 92.6% and 7.4% of the pool, respectively. A majority of the loans are either classified as non-qualified mortgages (Non-QM; 42.1%) or exempt (46.8%) from the Ab...
Back to Newsroom