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KBRA Assigns Long-Term Rating of AA- to the City of Chicago Second Lien Wastewater Transmission Revenue Bonds, Refunding Series 2024A ; Outlook Stable

KBRA assigns a long-term rating of AA- with a Stable Outlook to the City of Chicago Second Lien Wastewater Transmission Revenue Bonds, Refunding Series 2024A. The long-term rating reflects the Wastewater System’s strong financial flexibility, historically stable operating performance, and the favorable characteristics of the large and diverse service area. Concurrently, KBRA affirms the long-term rating of AA- with a Stable Outlook on the City of Chicago's parity Second Lien Wastewater Transmission Revenue Bonds.

The Second Lien Wastewater bonds are limited obligations of the City of Chicago (“the City”), payable solely from a second lien on net revenues of the sewer revenue fund.

Key Credit Considerations

The rating was assigned because of the following key credit considerations:

Credit Positives

  • Large, diverse, and stable City of Chicago customer base and track record of providing reliable sewerage, drainage collection and conveyance service.
  • Strong debt service coverage levels generated by consistent rate increases and operational efficiencies.
  • Healthy liquidity in each of the last five years.

Credit Challenges

  • Lack of a debt service reserve fund (DSRF), and a relatively weak (1.1x) rate covenant.
  • High leverage, evidenced by a debt-to-plant ratio of 62.9% at FYE 2022, down only modestly from 71% at FYE 2021.

Rating Sensitivities

For upgrade:

  • Material, sustained reduction in leverage.

For downgrade:

  • Failure to implement timely rate increases leading to declines in debt service coverage and/or constrained liquidity.
  • Unfavorable service area demographic trends leading to reduced rate-setting flexibility.

To access rating and relevant documents, click here.



A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining the credit rating is available in the Information Disclosure Form(s) located here.

Information on the meaning of each rating category can be located here.

Further disclosures relating to this rating action are available in the Information Disclosure Form(s) referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at

About KBRA

Kroll Bond Rating Agency, LLC (KBRA) is a full-service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. Kroll Bond Rating Agency Europe Limited is registered as a CRA with the European Securities and Markets Authority. Kroll Bond Rating Agency UK Limited is registered as a CRA with the UK Financial Conduct Authority. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized by the National Association of Insurance Commissioners as a Credit Rating Provider.

Doc ID: 1003482


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