Global Credit Research – 15 Oct 2015
Affects $31.9M of rated debt
New York, October 15, 2015 — Moody’s Investors Service has affirmed the City of DeKalb, IL’s general obligation rating of Aa2. The Aa2 rating applies to $31.9 million of outstanding general obligation unlimited tax (GOULT) debt. The outlook has been revised to negative.
SUMMARY RATING RATIONALE
The Aa2 rating reflects the issuer’s depreciating tax base, local economy supported by the institutional presence of Northern Illinois University (“NIU”; revenue rated A3/NEG), strong revenue raising abilities, improving financial position, above average debt burden and elevated pension liabilities.
OUTLOOK
The negative outlook reflects the city’s growing pension liabilities and the persistent declines to the property tax base. Also incorporated into the negative outlook is the city’s dependence on revenues from the State of Illinois (A3 negative).
WHAT COULD MAKE THE RATING GO UP
- – Expansion and diversification of the tax base
- – Continued growth in the city’s reserves and liquidity
- – Moderation of the city’s debt and pension burdens
WHAT COULD MAKE THE RATING GO DOWN
- – Continued deterioration in the tax base
- – Material declines in the village’s reserves and liquidity
- – Increase in the city’s debt or pension burden
OBLIGOR PROFILE
The City of DeKalb is located 60 miles from downtown Chicago along I-88 corridor and serves as the county seat for DeKalb County. The offers a sizeable retail presence for the county.
LEGAL SECURITY
Debt service on DeKalb’s GO debt is secured by the city’s GO unlimited tax pledge, which benefits from the authority to levy without limitation as to rate or amount.
USE OF PROCEEDS
Not applicable.
PRINCIPAL METHODOLOGY
The principal methodology used in this rating was US Local Government General Obligation Debt published in January 2014. Please see the Credit Policy page on www.moodys.com for a copy of this methodology.
REGULATORY DISCLOSURES
For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody’s rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the rating action on the support provider and in relation to each particular rating action for securities that derive their credit ratings from the support provider’s credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.
Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.
Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody’s legal entity that has issued the rating.
Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.
Nathan Carley
Associate Analyst
Public Finance Group
Moody’s Investors Service, Inc.
100 N Riverside Plaza
Suite 2220
Chicago, IL 60606
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
David Levett
Analyst
Public Finance Group
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Releasing Office:
Moody’s Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
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