Press Release|Public Finance
KBRA Affirms AA- Rating on Chicago Transit Authority Series 2016A (Rail Fleet Renewal Project ) TIFIA Bonds, and Series 2015 (Your New Blue Project) TIFIA Bonds; Outlook is Stable
5 Apr 2024 | New York
KBRA affirms the long-term rating of AA- for the Chicago Transit Authority Series 2016A TIFIA Bonds (Rail Fleet Renewal Project) and Series 2015 TIFIA Bonds (Your New Blue Project). The Outlook is Stable.
Key Credit Considerations
The rating was affirmed because of the following key credit considerations:
Credit Positives
- The CTA public transit system provides an essential service to the greater Chicago metropolitan area.
- The gross revenue pledge supports currently robust coverage of TIFIA loan debt service.
Credit Challenges
- CTA’s $2.0 billion FY 2024 proposed operating budget includes a gap of $472.5 million, to be closed with Federal relief funds. CTA faces a funding cliff upon expiration of Federal stimulus relief in 2025.
- A high fixed-cost structure contributes to a lack of operating expense flexibility.
- Liquidity is low and could be pressured if the springing funding requirement for the TIFIA loan debt service reserve is triggered.
Rating Sensitivities
For Upgrade
- Identification of one or more permanent, alternative sources of revenues enabling budgetary balance in 2025 and beyond.
- Sustained annual increases in total operating revenue that outpace growth in operating expenditure.
- A significant and sustained improvement in system liquidity.
For Downgrade
- A worsening trend of structurally unbalanced financial operations and/or a significant decline in system liquidity.
- Inability to achieve long-term structural balance will pressure the rating.
To access rating and relevant documents, click here.