Standard & Poor’s last week revised its outlook on the Illinois Regional Transportation Authority’s AA-plus rating to stable from positive over the fiscal and capital pressures the system faces and the potential effect on future debt service coverage levels.
The rating reflects the authority’s large, strong and diverse Chicago metropolitan area service economy, which generates the RTA’s sales tax revenues.
The credit further benefits from strong, steady growth of pledged revenue, historically high debt service coverage, with 2008 sales tax collections providing a strong 4.7 times annual debt service coverage, and strong legal provisions that include a historical 2.5 times maximum annual-debt service additional bonds test.
“We expect that the authority will maintain at least minimal reserves while operating in what we think is a challenging revenue climate, and that the service area’s diverse tax base will continue to generate revenues that will translate to continued strong debt service coverage and uninterrupted or reduced funding to the service boards,” wrote analyst Helen Samuelson.
Moody’s Investors Service earlier this month downgraded the RTA’s general obligation credit to Aa3 from Aa2 with a stable outlook. Fitch Ratings dropped it to AA-minus from AA and assigned a negative outlook. The system has $2.3 billion of outstanding GO debt that is secured by a gross pledge of sales taxes and other state aid.
Standard & Poor’s last week also revised the Chicago Transit Authority’s $2 billion of sales and transfer tax revenue bonds to stable from positive. The RTA oversees the CTA.
