The Chicago Board of Education (CBOE) sold $575 million in bonds to improve the city’s schools.
The bonds mature between 2030 and 2049, yielding between 5.19% and 6.08%. They received a rating of BB+ from Fitch Ratings, BBB from Kroll Bond Rating Agency, and BB+ from S&P Global Ratings.
The rating reflects “CBOE’s adequate levels of reserves and liquidity and inflationary revenue growth,” Fitch analysts wrote.
The issuance comes amid warnings of a budgetary shortfall for Chicago’s public schools. School board officials said that after pandemic relief funding is exhausted in 2025, the school system could face a deficit of almost $400 million, Chalkbeat Chicago reported. State law requires public school systems to balance their budgets, so any shortfall will require district officials to cut spending or increase revenue.
The bond proceeds will finance the construction of new schools and renovations to existing schools, among other purposes.
The issuance marks the second major bond sale by the City of Chicago in recent weeks. In the day preceding the sale of the school bonds, the city sold more than $500 million in bonds to finance improvements at Midway International Airport. The two issuances totaled more than $1 billion in borrowing.
The bonds are general obligations of the board, backed by its full faith and credit, and its taxing power.
BofA Securities, Inc served as lead underwriter on the issuance, purchasing the bonds for $564 million. The price reflected a discount of $11 million.