Moody’s upgrades rating on $1.7 billion of RTA bond funds

May 6, 2022

Improved rating and outlook reflect better-than-expected regional sales tax revenues and State of Illinois reinstatement of matching funds

Contact: Tina Fassett Smith, Director of Communications (312-913-3256, tina.smith@RTAChicago.org) 

CHICAGO, May 6, 2022 — Moody’s Investors Service has upgraded its rating on approximately $1.7 billion of Regional Transportation Authority (RTA) bonds, reflecting “resiliency in the authority’s tax base following a rapid rebound in taxes after the drop in 2020.”
 
Moody’s improved its rating of the RTA bonds, which are backed primarily by regional sales tax revenue, to A1 from Aa3. “It also reflects the expectation that state funding will remain stable and timely given improved fiscal conditions of the State of Illinois,” according to a press release from Moody’s. The rating agency notes that in the past, the RTA was subject to months of delay in receiving state public transportation funds, but that distributions are now being made in a timely manner.
 
Moody’s stated that the strong ratings for the RTA incorporate the breadth and strength of the agency’s tax base, which includes the counties of Cook, DuPage, Kane, Lake, McHenry, and Will.
 
The agency also affirmed the short-term P-1 rating on the RTA’s Series 2005B extendible reset securities. “The P-1 rating reflects sound timing provisions and management's capacity to redeem the reset securities... Further, the authority maintains healthy liquidity relative to the amount of extendable reset securities outstanding.”
 
“This is a critical time for our region’s transit system,” said Kirk Dillard, RTA Board Chairman. “This rating upgrade reflects the RTA’s commitment to strong financial oversight and diligence in working toward improving the system while balancing fiscal realities as we continue to recover from the pandemic.”
 
The RTA is currently developing the next regional transit strategic plan, which will include a 10-year financial plan for the future of funding public transit in northeastern Illinois.