KBRA assigns a long-term AAA rating with a Stable Outlook to the Transportation Revenue Refunding Bonds, 2024 Series 2 to be issued by the State of Wisconsin (the State). Concurrently, KBRA affirms the long-term AAA rating with a Stable Outlook on approximately $1.5 billion of outstanding Transportation Revenue Bonds (TRBs). TRBs are secured by a first lien pledge of Program Income, including vehicle Registration Fees and Other Registration-Related fees.

Key Credit Considerations

The rating actions reflect the following key credit considerations:

Credit Positives

• Steady growth in pledged revenues, aided by proactive legislative rate adjustments, enables strong MADS coverage.
• Strong legal framework, including strong additional bonds test for TRB’s (2.25x), and covenant to charge sufficient vehicle registration fees and registration-related fees to pay debt service.
• The essential nature of pledged revenues (Program Income), which consist largely of motor vehicle registration and related fees that are imposed and collected statewide.

Credit Challenges

• Vehicle registration fees may be sensitive to broader economic trends, though any potential declines are unlikely to impact the rating given strong coverage levels and the State’s history of adjusting fees.

The Stable Outlook reflects KBRA's expectations that Program Income will continue to provide strong coverage of TRB debt service, and that the State will continue its long-standing practice of monitoring and adjusting transaction fees, when necessary.

Rating Sensitivities

For Upgrade

• Not applicable at AAA rating level.

For Downgrade

• A sustained decline in Program Income. The State’s proactivity in maintaining rates to ensure consistent funding of debt service helps to mitigate this risk. While unlikely, the overleveraging of pledged revenues leading to a significant decline in maximum annual debt service coverage.

To access rating and relevant documents, click here.

Methodologies

• Public Finance: U.S. Special Tax 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: 1003399

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