Fitch Ratings assigned a AA-minus to prospective bank bonds corresponding to Cook County, Ill.’s taxable general obligation variable-rate bonds, Series 2002A. In addition, Fitch affirmed the county’s rating of AA-minus on $2.9 billion of outstanding GO debt. The outlook is stable.
The county’s long-term rating of AA-minus continues to reflect a deep and diverse economic base, but one that has experienced rising unemployment and a troubled housing market, Fitch said. It still adequate but reduced financial flexibility, as sufficient general fund reserves are offset by growing subsidization of health care and the high sales-tax environment amid a weaker economic climate; and a moderate debt burden, analysts wrote.
The AA-minus on prospective bank bonds is based on the county’s credit fundamentals and a review of bank bond terms.
Based on a review of the interest rate provisions, cure period, and amortization schedule specified in the documents governing the bank bonds, Fitch believes that the incremental risk that would be associated with bank bonds corresponding to Series 2002A, should they become bank held, would not likely have a material impact on Cook County’s long-term credit rating.
The county is pursuing ratings incorporating a new liquidity provider for Series 2002A. Fitch said it will issue a separate press release detailing that rating and provisions.
About half of the county’s $658.3 million of outstanding variable-rate demand obligations have been tendered at various points during the past year.
With its various liquidity and letter-of-credit replacements, the county has successfully remarketed all of its bank-held bonds, and Series 2002A, approximately $113 million, is not currently bank held.
