Latest Post | Last 10 Posts | Archives
Previous Post: Republicans to talk budget as Rep. Andersson says he could support tax hikes
Next Post: *** UPDATED x1 *** Report: Congressional shooter is from Belleville
Posted in:
* The RTA wasn’t the only transit entity hit with a Moody’s downgrade yesterday. From Moody’s…
Late yesterday, Moody’s downgraded the Chicago Transit Authority (CTA)’s Sales Tax Receipts Revenue Bonds two notches from A1 to A3, and assigned a negative outlook. Also affected by this action are Series 2006 Building Refunding Revenue Bonds issued through the Public Building Commission of Chicago to refinance CTA’s headquarters, with $67 million outstanding; the rating on these bonds was lowered to Baa1 from A2. The negative outlook connotes continued downward pressure on the rating and the possibility of another downgrade in the next 12-24 months.
The downgrades are driven primarily by the authority’s exposure to the State of Illinois, which was downgraded to Baa3 from Baa2 on June 1, amid an extended political impasse in the Illinois General Assembly over how to balance the state’s budget. After two years of failing to reach an agreement, and operating with substantial budget deficits, the state has allowed a backlog of payments owed to CTA and other public- and private-sector entities to rise to record levels ($14.68 billion in aggregate as of June 5, according to the state comptroller). This prolonged impasse is putting pressure on various entities like CTA that are awaiting payment from the state.
The State of Illinois also collects regional sales taxes that support CTA and other Chicago-area transit providers, and it also provides other forms of supplemental funding. Like the state itself, CTA faces a worsening pension funding burden. Failure to make required annual pension contributions could jeopardize the flow of funds to holders of some of the authority’s debt, although to date CTA has made all required contributions.
* From the report…
Credit Challenges
» Economic and financial pressure caused by state and local governments’ overlapping pension liabilities, which will limit the ability to increase revenues for capital or operating needs
» Exposure to credit deterioration of related governments including the state and Chicago
» State aid payment deferrals and absence of state plan to address backlog of unpaid bills
» Backlog of capital investment needs and large unfunded authority pension liabilitiesRating Outlook
The negative outlook incorporates the state’s continuing credit deterioration, which threatens to exacerbate ongoing aid payment delays in coming months, barring an agreement to compensate for the state’s recent revenue losses. It also factors in the Chicago area’s economic vulnerability to tax increases needed to address pension liabilities, which could undermine regional sales tax revenues at a time when regional transit providers are trying to address deferred capital investment needs.
Factors that Could Lead to an Upgrade
» Stabilization of related governments’ credit positions
» Sustained trend of improving debt service coverage
» Pledge of new or increased revenues
» More stringent legal protections for bondholdersFactors that Could Lead to a Downgrade
» Substantial shortfalls in pledged sales tax revenues caused by economic conditions or other factors
» Prolonged decline in debt-service coverage, whether from increased borrowing or revenue underperformance
posted by Rich Miller
Wednesday, Jun 14, 17 @ 9:41 am
Sorry, comments are closed at this time.
Previous Post: Republicans to talk budget as Rep. Andersson says he could support tax hikes
Next Post: *** UPDATED x1 *** Report: Congressional shooter is from Belleville
WordPress Mobile Edition available at alexking.org.
powered by WordPress.
The ship is sinking and Captain Rauner is upset he’s only getting 90%!
Comment by Precinct Captain Wednesday, Jun 14, 17 @ 9:54 am
Are there any other #TA’s that can be downgraded? How many do we need, exactly? It’s looking like a splendid place to trim some largesse and fat.
Comment by Puddintaine Wednesday, Jun 14, 17 @ 10:00 am
Is it marvelous that the Chicago Transit Authority still found $2.1 billion for the Belmont Flyover?
Rahm Emanuel could not stand the two minute delay when the trains had to pause for switches near the Belmont station, which serves three train lines.
Comment by W Flag Wednesday, Jun 14, 17 @ 10:18 am
How many downgrades have there been now since Rauner took the office?
Comment by Anonymous Wednesday, Jun 14, 17 @ 10:21 am
===Are there any other #TA’s that can be downgraded? How many do we need, exactly? It’s looking like a splendid place to trim some largesse and fat.===
If you can explain the differences yourself, then you can explain the need for them both and/or the fat.
It appears you can do neither.
Comment by Oswego Willy Wednesday, Jun 14, 17 @ 10:23 am
Just remember, this fiscal recklessness was avoidable. Squeeze the beast was and is the plan. This is just another predictable consequence.
Comment by wordslinger Wednesday, Jun 14, 17 @ 11:40 am
Again I say, raise the cost of a ride. It helps.
Comment by blue dog dem Wednesday, Jun 14, 17 @ 11:46 am
so much winning it hurts.
Heckuva job, Brucie.
Comment by Jerry 101 Wednesday, Jun 14, 17 @ 12:01 pm
Blue dog from, Metra just raised rates at the beginning of the year.
Comment by historic66 Wednesday, Jun 14, 17 @ 12:14 pm
66. Apparently not enough.
Comment by blue dog dem Wednesday, Jun 14, 17 @ 12:47 pm
historic66 - Wednesday, Jun 14, 17 @ 12:14 pm:
Blue dog from, Metra just raised rates at the beginning of the year.
You could raise rates to $50.00 a ride and it wouldn’t be enough for these people!!
Comment by Greg Wednesday, Jun 14, 17 @ 3:02 pm
The RTA region has the lowest cost per passenger mile and spends like half of what New York does. Seriously?! This whole thing is sad. Bummer for CTA today.
Comment by TransitRider Wednesday, Jun 14, 17 @ 6:36 pm