Fitch Ratings has downgraded to 'BBB+' from 'A-' the rating on the following Chicago, IL motor fuel tax bonds:
--Approximately $101 million motor fuel tax revenue TIFIA bond (Wacker Drive Reconstruction
Project - Including the Chicago Riverwalk Expansion: TIFIA 2013-1004A);
--$103.6 million motor fuel tax revenue refunding bonds, series 2013;
--$114.4 million motor fuel tax revenue bonds, series 2003A;
--$62.9 million motor fuel tax revenue bonds, series 2008A;
--$3.7 million motor fuel tax revenue bonds, series 2008B.
The rating action was triggered by the downgrade of the State of Illinois' general obligation (GO)
rating to 'A-' from 'A'.
The rating is removed from Rating Watch Negative. The Rating Outlook is Negative.
SECURITY
The bonds are secured by a first lien on all motor fuel taxes distributed to the city by the state,
subject to annual appropriation by the state legislature. Additionally, various project-related
revenues are pledged.
KEY RATING DRIVERS
STATE RATING DOWNGRADE: The downgrade was triggered by Fitch's downgrade of the state
of Illinois' GO bond rating to 'A-' from 'A'. The rating on the fuel tax bonds is limited by the state's
credit quality. Motor fuel tax revenues are distributed according to a formula controlled by the state
and are subject to annual appropriation by the state. Therefore, the rating on these bonds is capped
at one notch below the state's GO rating.
SOLE RELIANCE ON FUEL TAX REVENUES: The rating assumes no support from the
additionally pledged revenues, given the difficulty in assessing the new revenue stream. It therefore
relies solely on the motor fuel tax revenue stream.
ADEQUATE COVERAGE: Fitch base case projections indicate maximum annual debt service
coverage at or above 1.3x, assuming modest annual declines in motor fuel tax revenues.
NEGATIVE OUTLOOK TIED TO STATE'S RATING: The Negative Outlook results from Fitch's
Negative Outlook on the state of Illinois' GO bond rating.
RATING SENSITIVITIES
STATE CREDIT QUALITY: The rating is sensitive to a downgrade in the state's GO rating
(currently 'A-', Rating Outlook Negative). A downgrade of the state's GO rating would result in a
downgrade of these bonds.
