The Chicago Board of Education plans to return to market this week with $650 million of Series 2025A unlimited tax general obligation bonds.
The tax-exempt bonds will fund its capital improvement program. The board's capital budget in fiscal year 2026 totals $559.9 million.
The deal will price Thursday, Chicago Public Schools spokesperson Mary Fergus said by email.
S&P Global Ratings assigns the bonds a speculative-grade BB-plus rating with a stable outlook. KBRA rates the bonds investment-grade BBB with a negative outlook.
In its rating report, KBRA said it maintained its negative outlook because, despite the district's
S&P noted the district saw steeper operating pressures in fiscal 2025 due to the expiration of pandemic relief funds and commitments made under a contract with the Chicago Teachers Union.
The co-senior underwriters on the deal are Loop Capital Markets and PNC Capital Markets. The financial advisor is Columbia Capital Management. Bond counsel is Katten Muchin Rosenman, LLP.
The board's full faith and credit and taxing power are pledged to timely payments on the bonds. They are secured by pledged state aid revenues and pledged ad valorem property taxes, according to the preliminary official statement.
The district said in the investor presentation that its fiscal year 2025 is projected to end in balance. There will be another delay in the second installment of property tax billing by Cook County, it said, which will result in delayed receipts and be managed by the district's tax anticipation note program.
CPS has drawn criticism for its reliance on TANs, but the district said in the presentation that the 2025A bonds will continue a shift in the debt service deposit date to March 15 each year.
"Over time, this 30-day change from Feb. 15 that places the annual debt service deposit on new bonds after the typical first installment property tax due date of March 1 will reduce CPS's need for TANs draws in February (and) March," the presentation says.
Fergus said the change in timing of the deposit dates back to 2022, and the 2025A bonds will be the third transaction with the new date. The change is being implemented with each new bond issue sold for either capital or refunding purposes, she said, the goal being to adjust a majority of the deposit dates over time.
Prior this week's deal, the district had about $7.7 billion of pledged state aid revenue bonds outstanding. It had $9.6 billion of direct debt outstanding at fiscal year end 2024.
The pro forma debt service schedule on the 2025A bonds would involve paying no debt service until 2027, and a backloaded structure that leans heavily on higher payments in 2047, 2048, 2049 and 2050, according to the presentation.
"The debt service of the proposed bonds and specifically the principal payments of the issue are layered around the district's existing debt service and intended to create an overall blended structure," Fergus said.
Linda Vanderperre, managing director at KBRA, said by email that while the district's decreased reliance on TANs does not directly enhance the security structure of the bonds, KBRA views that development as credit positive at the issuer level.
"We expect the district's cash flow situation to improve upon rectification of the billing system problems that have delayed Cook County's collection and distribution of the second tax installment of property taxes, the district's largest revenue source," she added.
"If the board fails to continue implementing structural measures to significantly reduce the fiscal 2027 and outyear deficits and sustain its reserve and liquidity positions near current levels, we could take a negative rating action," S&P said.
The Chicago Board of Education is rated BB-plus by Fitch Ratings. The outlook is stable. Moody's Ratings rates the district Ba1 with a positive outlook.
The district's former CFO, Miroslava Mejia Krug, recently departed CPS for Lindenwood Education System, a Missouri higher education nonprofit that includes Lindenwood University, Dorsey College, and Ancora Education.
Reached by email, Krug,
Fergus said the departure was voluntary.
"We will deeply miss her as a trusted colleague and partner," CPS Interim CEO/Superintendent Dr. Macquline King said in a statement. "Her vision and discipline were instrumental in securing multiple credit upgrades, strengthening the district's fiscal foundation, and building greater confidence in CPS's long-term stability."
The acting CFO of CPS is Walter Stock, the district's treasurer since 2019.
