With tailwinds from a rating upgrade, Cook County, Illinois, plans to return to market Tuesday with $119.48 million of Series 2026 fixed rate, tax-exempt sales tax revenue bonds.
The Series 2026 bonds will refund two outstanding series of general obligation bonds, the Series 2014D and Series 2018 GO bonds, according to the
"This refunding was part of a plan the county instituted in 2016 allowing it to implement a debt structure that, when including new issuances, limits the rise in debt service cost to no more than 2%," Cook County Bureau of Finance spokesman Ted Nelson said by email.
"The expected savings from the strategic restructuring will allow the county to continue to implement that debt structure and keep the rise below the 2% target in the coming years," he added.
The revenue bonds are rated AA-plus by Fitch Ratings, AAA by KBRA and Aa3 by Moody's Ratings. The outlooks are all stable.
Moody's also assigns its Aa3 rating to Cook's issuer rating and general obligation bonds.
Some of the proceeds will also finance current county projects and pay costs of issuance.
"The county will be seeking direct reimbursement for capital projects that occurred over the last 10 months," Nelson said. "Some major projects include the restack of the County building, demolition work at the Oak Forest Campus and upgrades at Stroger Hospital."
Lead managers on the deal are Loop Capital and PNC. Co-municipal advisors are Columbia Capital and Sycamore Advisors. Bond counsel is Katten Muchin Rosenman LLP.
The pricing date could change based on market volatility, Nelson said.
The bonds will be limited obligations, payable solely from the pledged sales tax revenues of the county, according to the POS.
Pledged sales tax revenues for debt service consist of the home rule county retailers' occupation tax and the home rule county service occupation tax.
The county's sales tax rate is currently 1.75%, and there's no cap on the rate at which the county may impose sales taxes, but it is statutorily required to impose taxes only in 0.25% increments, an online investor presentation for the deal noted.
In FY2025, the county took in $1.321 billion in sales tax revenue, a 15.8% year-over-year uptick.
The county has covenanted not to take any steps that would cause adjusted pledged sales tax revenues to drop below 1.35x annual coverage, according to the investor presentation.
The FY2026 estimated current annual debt service coverage ratio is projected to be 18.6x and the maximum annual debt service debt service coverage ratio is estimated to be 15.2x.
The bonds are expected to amortize between Nov. 15, 2026, and 2051.
Security features on the bonds include the coverage covenant and a 2.5x additional bonds test, as well as accelerated debt service deposits with principal and interest fully funded prior to the payment date.
Prior to the issuance of the Series 2026 bonds, Cook County had $968.4 million of sales tax revenue debt outstanding.
S&P, which wasn't asked to rate the deal, rates Cook County's outstanding GO bonds A-plus and sales tax revenue bonds AA-minus, with stable outlooks.
