KBRA Assigns AAA Rating and Stable Outlook to State of Ohio General Obligation Highway Capital Improvement Bonds Series W

NEW YORK–(BUSINESS WIRE)–Kroll Bond Rating Agency (KBRA) assigns a long-term rating of AAA with a Stable Outlook to the State of Ohio General Obligation Highway Capital Improvement Bonds Series W. KBRA additionally affirms the long-term rating of AAA and Stable Outlook on the General Obligation Highway Capital Improvement Series V.

To access ratings and relevant documents, click here. A rating report will follow.

Key Credit Considerations

KBRA continues to monitor the direct and indirect impacts of the COVID-19 virus on the Special Tax and State GO sectors. Please refer to KBRA’s ongoing research on the topic here for more information.

The rating level reflects the following key credit considerations:

Credit Positives:

• Debt service coverage is very favorable at approximately 20.0x and is expected to improve following the increase to the motor vehicle gasoline tax effective July 1, 2019.
• The bonds enjoy the general obligation pledge of the State and additional credit protection from the pledged highway revenues, which puts them in a position senior to GO bondholders.

Credit Challenges:

• Certain economic indicators have lagged national averages over the longer term, notably population and job growth. Should this divergence from national averages widen, it could develop into a rating consideration.

Rating Sensitivities

Upgrade:

• Not applicable for a AAA rating.

Downgrade:

• Significant deterioration in economic performance or a more pronounced and negative divergence from U.S. average indicators.

ESG Considerations

When relevant to credit, ESG factors are incorporated into the credit analysis in the same manner as all other credit-relevant factors. Among the ESG factors that have impact on this rating analysis are:

• Discussions in RD 1 reflect Governance Factors. KBRA has examined the following areas for this credit: management structure, revenue raising flexibility, financial monitoring, and long-term planning.
• Discussions in RD 3 reflect Social Factors. KBRA has examined the following areas for this credit: trends in population, education, income, poverty levels, employment, unemployment, gross state product and the potential impact of the COVID-19 crisis.

More information on ESG Considerations for the Public Finance sector can be found here.

Disclosures

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 U.S. Information Disclosure Form 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 U.S. Information Disclosure Form referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com.

About KBRA

KBRA is a full-service credit rating agency registered as an NRSRO with the U.S. Securities and Exchange Commission. 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 and is a certified Credit Rating Agency (CRA) with the European Securities and Markets Authority (ESMA). Kroll Bond Rating Agency Europe Limited is registered with ESMA as a CRA.

Contacts

Analytical Contacts

Paul Kwiatkoski, Managing Director (Lead Analyst)

+1 (646) 731-2387

pkwiatkoski@kbra.com

Patricia McGuigan, Senior Director

+1 (646) 731-3350

pmcguigan@kbra.com

Peter Scherer, Associate

+1 (646) 731-2325

pscherer@kbra.com

Karen Daly, Senior Managing Director (Rating Committee Chair)

+1 (646) 731-2347

Kdaly@kbra.com

Business Development Contacts

Bill Baneky, Managing Director

+1 (646) 731-2409

bbankey@kbra.com

James Kissane, Senior Director

+1 (213) 806-0026

jkissane@kbra.com