KBRA Assigns A Rating to City of Joliet (IL) Waterworks and Sewerage System's Senior Lien WIFIA Loan (Alternative Water Supply Program - Phase III Project WIFIA 19155IL); Affirms Outstanding WIFIA Loans at A; Outlook Stable

KBRA assigns a long-term rating of A to the City of Joliet, IL (the "City") Waterworks and Sewerage System's (the "System") Senior Lien WIFIA Loan Phase III (19155IL) for the Alternative Water Supply Program (AWSP). KBRA also affirms the long-term rating of A for the System's existing two WIFIA loans for the AWSP. The rating outlook is Stable.

Key Credit Considerations

The rating was assigned and affirmed because of the following key considerations:

Credit Positives

• Joliet City Council maintains rate-setting autonomy and has demonstrated a willingness to increase rates in advance of and through the large capital program.
• Historical financial results have been sound, with annual rate increases supporting strong liquidity and debt service coverage.
• Comprehensive strategic capital planning process is addressing long-term water sustainability concerns.

Credit Challenges

• Managing the substantial capital plan and the potential for unanticipated cost increases through 2030.
• System leverage will continue to trend higher as the large capital plan is largely debt financed.
• Substantial increases in rates may pressure affordability over the longer-term.

Rating Sensitivities

For Upgrade

• Sustained financial operating results significantly above projections.

For Downgrade

• Project cost overruns or scope changes that result in a significant financial burden, pressuring rates and rate affordability.
• Sustained unfavorable financial operating results which pressure debt service coverage or leverage to a level not supportive of the system’s current rating level.

To access ratings and relevant documents, click here.

Methodologies

• Public Finance: U.S. Municipal Retail Utility Revenue Bond Rating Methodology
• ESG Global Rating Methodology

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 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 www.kbra.com.

About KBRA

Kroll Bond Rating Agency, LLC (KBRA), one of the major credit rating agencies (CRA), is a full-service CRA 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 (DRO) by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized as a Qualified Rating Agency by Taiwan’s Financial Supervisory Commission and is recognized by the National Association of Insurance Commissioners as a Credit Rating Provider (CRP) in the U.S.

Doc ID: 1009666

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