KBRA assigns an A+ rating, with a Stable Outlook to General Airport Senior Lien Revenue Refunding Bonds, Series 2024C (AMT) and Series 2024D (Non-AMT); and General Airport Senior Lien PFC Revenue Refunding Bonds, Series 2024E (AMT) and Series 2024F (Non-AMT) to be issued by the City of Chicago ("the City") on behalf of Chicago O'Hare International Airport ("O'Hare" or "the Airport"). At the same time, KBRA affirms the A+ rating, Stable Outlook assigned to outstanding GARBs previously issued by the City on behalf of O'Hare.

Proceeds of the Series 2024C and Series 2024D Refunding Bonds will be applied by the City to refund a portion ($1.5 billion) of outstanding Series 2015A-D GARBs for debt service savings and to increase the amount on deposit in the Common Debt Service Reserve Sub-Fund to the Reserve Requirement (MADS). The Series 2024E and Series 2024F Refunding Bonds will refund a portion ($256.0 million) of certain outstanding Passenger Facility Charge (PFC) Revenue Bonds, with an ultimate goal of reducing debt service supported by PFC Revenues.

General Airport Senior Lien Revenue Bonds (GARBs), including the Series 2024C-F Refunding Bonds, are secured by a first lien pledge of Revenues derived from the operations of O’Hare and certain funds and accounts maintained under the Senior Lien Indenture. Debt service on the Series 2024E and Series 2024F Refunding Bonds is additionally payable from and secured by a pledge of Other Available Moneys consisting of a subordinate pledge of PFC Revenues imposed by the City at O’Hare.

Key Credit Considerations

Credit Positives

• Strong, diverse, expansive air trade area supporting O&D activity that forms the basis for hubbing.
• Unique status as a dual connecting hub for both United Airlines and American Airlines.
• Elevated and increasing airline costs, partially tempered by airline profitability and the efficiency, capacity and financial benefits afforded by completed and in-process capital projects.

Credit Challenges

• Very high leverage, with pro-forma GARBs totaling $10.5 billion.
• Expected, significant future debt issuance through at least CY 2030, which will further elevate debt metrics.
• Execution and other risks attendant to a significant, complex multi-year capital plan.

The Stable Outlook reflects KBRA’s expectation that enplanement-related growth in non-airline revenue, along with increasing airline payments, will support expected, additional GARBs associated with Capital Programs implementation. O’Hare’s fundamental importance to the Chicago region and, more broadly, the national airspace system, and continuing airline support for capital reinvestment at the Airport further inform KBRA’s Outlook.

Rating Sensitivities

For Upgrade

• Sustained passenger traffic at or above the pre-pandemic level.
• A material increase in revenue contributed by non-aeronautical sources, notably concessions.

For Downgrade

• Issuance of GARBs beyond level currently disclosed, leading to diminished financial flexibility.
• Failure to address potential delays and/or cost overruns related to Capital Programs on a timely basis.
• While unlikely, the elimination or reduction of hubbing operations by United or American.

To access rating and relevant documents, click here.

Methodologies

• Public Finance: U.S. General Airport 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) is a full-service credit rating agency 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 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.

Doc ID: 1006292

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