Standard & Poor’s last week revised its outlook on the Illinois Regional Transportation Authority’s AA-plus general obligation credit to positive from stable, as strong debt coverage levels are expected to remain intact even if the General Assembly approves additional borrowing for the agency.
An upgrade to top marks “is contingent upon clarification of the authority’s additional debt needs, and our assessment that there will be a substantial likelihood that the authority’s bonds will maintain strong debt service coverage,” analysts wrote.
The credit benefits from the large, strong, and diverse Chicago metropolitan service area economy, which generates the RTA’s sales tax revenue that goes to repay bonds. The authority’s share of sales taxes in 2007 provided 3.9 times coverage of debt service on $2.5 billion of debt.
The RTA provides oversight of the Chicago Transit Authority, Metra commuter rail, and Pace suburban bus service. The General Assembly recently approved a sales tax increase for the region and a hike in Chicago’s tax on real estate transactions to provide more than $500 million annually for operations. A capital budget is still pending. The RTA has $10 billion of unfunded capital needs over the next decade and $34 billion over the next three decades and has nearly exhausted all of its existing borrowing authority.
The RTA is rated Aa2 by Moody’s Investors Service and AA by Fitch Ratings. Standard & Poor’s in 2006 raised its rating to AA-plus.