The Bond Buyer reported on June 10, 2019 that Cook County, Illinois is considering a securitization structure to lower borrowing costs.

“Revenue credits have taken a hit due to court rulings in Puerto Rico’s bankruptcy process and as some rating agencies revamp criteria to more closely link a revenue rating to that the general obligation credit of its issuing government or obligor. S&P Global Ratings cut Cook County’s sales bonds three notches last year,” the Bond Buyer said.

Under a securitization, the County would effect the sale of revenues to a bankruptcy-remote special entity, with the objective of insulating the special entity from municipal bankruptcy. A lock box structure would ensure revenues flow directly to the trustee to repay debt service before being released to the municipality.

Similar securitization structures have been deployed in New York City and Chicago, with the special entities typically receiving higher ratings than the underlying cities.

Read the article at the Bond Buyer.

Contact Kyle Skinner at KSkinner@BuyMuni.com.