KBRA Assigns AAA Rating to Sales Tax Securitization Corporation, IL Sales Tax Securitization Bonds; Assigns AA+ Rating to Second Lien Sales Tax Securitization Bonds. Outlook Stable.

NEW YORK--(BUSINESS WIRE)--KBRA assigns a long-term rating of AAA to the Sales Tax Securitization Corporation, IL Sales Tax Securitization Bonds, Refunding Series 2025A and Sales Tax Securitization Bonds, Taxable Refunding Series 2025B, and affirms the AAA rating on outstanding parity Sales Tax Securitization Bonds.

A long-term rating of AA+ is assigned to the Corporation's Second Lien Sales Tax Securitization Bonds, Refunding Series 2025A. KBRA affirms the AA+ rating on outstanding Second Lien Sales Tax Securitization Bonds.

The Outlook on all Bonds is Stable.

Key Credit Considerations

The rating actions reflect the following key credit considerations:

Credit Positives

• The combination of State law, the bankruptcy remoteness of the Corporation, the Sale Agreement, and the Indenture provide a strong legal framework that KBRA believes insulates the Pledged Sales Tax revenues and the Corporation from the operating and credit conditions of the City.
• A broad base of goods and services included in the Pledged Sales Tax revenue base and tested collection and distribution mechanics enhance underlying asset characteristics.
• An additional bonds test of 4.0x on Senior Lien and 1.75x combined Senior and Second Lien obligations prevents the Corporation from diluting the substantial cushion provided by Pledged Sales Tax revenues.
• Strong projected coverage of monthly deposit and annual debt service requirements is afforded by acceleration of standard set asides.

Credit Challenges

• The City’s own high overall sales tax rate may adversely affect growth of the pledged sales tax revenues.
• Certain personal property-related sales taxes imposed by the City are not part of Pledged Sales Taxes.

Rating Sensitivities

For Upgrade

• N/A

For Downgrade

• A significant decline in Pledged Sales Tax revenues, resulting in a material weakening of debt service coverage ratios.

To access ratings and relevant documents, click here.

Methodologies

• Public Finance: U.S. Special Tax Revenue Bond Rating Methodology
• ESG Global Rating Methodology

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: 1012068