KBRA Assigns AAA, Stable Outlook to State of Wisconsin G.O. Refunding Bonds

KBRA assigns a AAA rating, with a Stable Outlook to the State of Wisconsin's (the State's) General Obligation (G.O.) Refunding Bonds of 2025, Series 3 and G.O. Refunding Bonds of 2026, Series 1 (Forward Delivery). Proceeds of 2025, Series 3 will be used by the State to purchase certain outstanding G.O. bond maturities tendered by invited bondholders under a January 24th Invitation to Offer to Tender Bonds. Proceeds of 2026, Series 1 (Forward Delivery) will current refund certain outstanding G.O. bond maturities with a May 1, 2026 call date. A portion of the proceeds for each series will also fund related costs of issuance. Debt service savings is the State’s ultimate goal for both transactions.

In addition, KBRA affirms the long-term AAA rating, with a Stable Outlook on outstanding G.O. Bonds; the short-term K1+ rating on the G.O. Commercial Paper (CP) Program and G.O. Extendible Municipal Commercial Paper (EMCP) Program; and the long-term AA+ rating with a Stable Outlook on outstanding Master Lease Certificates of Participation (COPs). The COPs long-term rating is derived from the State's long-term G.O. rating and an evaluation of factors discussed in KBRA's U.S. State Annual Appropriation Rating Methodology.

As of January 1, 2025, the State had $6.7 billion of general obligations outstanding, including fixed rate G.O. Bonds and variable rate EMCP Notes. General obligations, including G.O. Bonds, are a direct and general obligation of the State, secured by its full faith, credit and taxing power.

Key Credit Considerations

Credit Positives

• Strength and breadth of the G.O. pledge, coupled with liquidity and market access to support short-term debt.
• Trend of conservative budgets, strong financial results and improved reserve levels.
• Strong liquidity position based on all sources of available cash for operations.
• Essentiality of assets under the Master Lease Program, supported by a strong, well-established legal framework.

Credit Challenges

• Any exogenous event that derails the State’s economic stability.
• Ability to maintain a positive, GAAP basis Total Fund Balance in successive fiscal years.

Rating Sensitivities

For Upgrade

• Not applicable.

For Downgrade

• Material financial weakening, driven by budgetary imbalance over an extended period.
• While unlikely, limited and/or expensive market access to manage maturing CP and EMCP Notes.
• A change in essentiality of assets leased under the Master Lease Program, increasing the risk of non-appropriation.

To access ratings and relevant documents, click here.

Methodologies

• Public Finance: U.S. State General Obligation Rating Methodology
• Public Finance: U.S. State Annual Appropriation Obligation 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.

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