KBRA Releases Report Assigning BBB Rating, Negative Outlook to the Board of Education of the City of Chicago, IL (Chicago Public Schools) Unlimited Tax General Obligation Bonds (Dedicated Revenues), Series 2025A

On September 5, 2025, KBRA assigned a long-term rating of BBB to the Unlimited Tax General Obligation Bonds (Dedicated Revenues) of the Board of Education of the City of Chicago, IL (Chicago Public Schools), Series 2025A. The Outlook remains Negative.

Concurrently, KBRA affirmed the long-term rating of BBB on those outstanding series for which, like the Series 2025A Bonds, KBRA has not received a legal opinion provided by the Board and approved by KBRA's outside counsel, that the property taxes securing the bonds should likely be treated as "special revenues", as defined under the U.S. Bankruptcy Code in a Chapter 9 legal proceeding. For those series with associated special revenue legal opinions, the BBB+ rating is affirmed. The Outlook on all outstanding series is Negative.

The maintenance of the Negative Outlook reflects KBRA's expectation that, despite the balanced FY 2026 budget, fiscal pressures will remain acute given CPS's constrained liquidity, structural imbalance, continued reliance on non-recurring revenues, and heavy fixed-cost burden. Further liquidity erosion, failure to secure adequate long-term revenues, significant mid-year budget revisions or a loss of market access would likely trigger downward rating action.

KBRA maintains low investment-grade ratings albeit with recognition of continued downside risk, given our view that despite persistent fiscal challenges, the District is likely to maintain near-term market access and state support sufficient to meet essential obligations, including payment of debt service on Alternative Revenue Bonds ("ARBs") issued under the Local Government Debt Reform Act and the School Code.

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Click here to view the report.