Moody’s Investors Service last week placed the Chicago Transit Authority’s $2 billion of sales and transfer tax receipts bonds and lease revenue bonds on negative watch, an action that stems from Moody’s downgrade earlier this month of the CTA’s parent agency.

About $2 billion of debt is affected, including $1.9 billion of sales tax bonds that are rated Aa3 and another $89 million of lease revenue bonds that sold through the Chicago Public Building Commission and are rated A2. The CTA’s A2-rated federal grant-backed bonds are not included in Moody’s review.

“The action reflects the downgrade of approximately $2 billion of the Regional Transit Authority’s general obligation bonds to Aa3 from Aa2,” analysts wrote. “The RTA downgrade reflected exposure to the fiscal challenges of the state of Illinois which has caused the state to delay payments of some pledged funds, as well as sales tax collections that, while up because of a tax increase, are falling well below expectations, both resulting in weakened RTA liquidity.”

Because most of the CTA’s non-farebox revenues — including sales and use taxes and state public transportation funds — flow through the RTA to the CTA, the CTA is impacted by the RTA’s credit quality. The RTA provides financial oversight of the CTA, Metra commuter rail and Pace suburban service.

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