KBRA confirms the rating of the sales tax appropriation obligations on combined privilege mass transit sales of the bi-state development agency; Outlook is stable


NEW YORK–(COMMERCIAL THREAD) – Kroll Bond Rating Agency (KBRA) confirms long-term rating of AA + with stable outlook for metropolitan district two-state development agency MO-IL Combined Lien Mass Transit Sales Tax Appropriation Bonds.

The rating reflects maximum annual debt service coverage through appropriate sales taxes in transit (TST), the broad and diverse tax base in which sales tax is collected, the historically stable performance of TST revenue and KBRA’s view that the risk of appropriation is extremely limited, given the strict limitations on the use of TST receipts, which are only available for debt service and non-road transit operations in accordance with to the In-Transit Sales Tax Act as promulgated by state law.

A monitoring report will follow.

Key Credit Considerations

KBRA continues to monitor the direct and indirect impacts of the COVID-19 virus. Click on here to access KBRA’s ongoing research on the subject.

The rating was confirmed due to the following key credit considerations:

Positive credits

  • Despite a substantial drop in TST revenue linked to the pandemic, MADS coverage is strong and is expected to remain so even under the KBRA’s conservative stress scenarios.

  • The aggregate annual debt service requirements of the combined lien bonds are steadily decreasing, with MAD 25.3 million occurring in fiscal year 2023. The Agency currently has no plans or authorization for additional debt.

  • Strict limitations on the use of promised sales tax revenues for non-road public transport greatly mitigate the risk of appropriation.

Credit challenges

  • Transit sales tax collections are subject to state, county and city legislation.

  • The inherent volatility of the sales tax revenue commitment may be exacerbated by the population decline evidenced by the jurisdictional boundaries of the city and, to a lesser extent, the county.

  • The substantial declines in ridership recorded since at least 2015 have been severely exacerbated by the pandemic.

Sensitivity Assessment

For the upgrade:

  • Sustained trend of growth in the economic resource base of the county and city which translates into increased sales tax revenue on public transportation.

For downgrading:

  • A decrease in debt service coverage due to a decrease in transit sales tax revenue or an increase in debt service associated with the issuance of additional pegged bonds.

To access the evaluations and relevant documents, click on here.


A description of all substantially significant sources that were used to prepare the credit rating and information about the method (s) (including significant models and sensitivity analyzes of the relevant key rating assumptions, if any) used to determine the credit rating are available in the information disclosure form (s) located here.

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

Further information relating to this rating measure is available in the information disclosure form (s) referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures can be found at www.kbra.com.

About KBRA

Kroll Bond Rating Agency, LLC (KBRA) is a full-service credit rating agency registered with the United States Securities and Exchange Commission as NRSRO. Kroll Bond Rating Agency Europe Limited is registered as a credit rating agency with the European Securities and Markets Authority. Kroll Bond Rating Agency UK Limited is registered as a credit rating agency with the UK Financial Conduct Authority under the temporary registration regime. In addition, KBRA is appointed as the designated rating agency by the Ontario Securities Commission for issuers of asset-backed securities to file a simplified prospectus or a shelf prospectus. KBRA is also recognized by the National Association of Insurance Commissioners as a credit rating provider.

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