Featured Municipal Bond Issue, Week of December 26, 2017: The City of Chicago Sales Tax Securitization Bonds – $795 Million 


This week’s featured bond comes from the State of Illinois. The Sales Tax Securitization Corporation is issuing $795 million in sales tax securitization bonds on behalf of the City of Chicago the week of December 26, 2017. These Chicago sales tax securitization bonds are being issued as a single series, Series 2018A. The bonds are being issued to refund some of the City’s outstanding general obligation bonds.

Security for the bonds is a pledge of and security interest in all Sales Tax Revenues, defined as:

  • Home Rule Sales Tax Revenues
    • Home Rule Municipal Retailers’ Occupation Tax
    • Home Rule Municipal Service Occupation Tax
    • Home Rule Municipal Use Tax on Titled Personal Property
  • Local Share Sales Tax Revenues
    • Illinois Retailers’ Occupation Tax
    • Illinois Service Occupation Tax
    • Illinois Use Tax
    • Illinois Service Use Tax

The bonds will be secured on a parity basis by a first priority lien. Any subordinated indebtedness would be secured by a lien that is subject to and subordinate to this lien. The last ten years of relevant annual sales tax revenues is displayed in the table below:

Further details on the purposes, tax-status, and security, as well as other matters pertaining to these Chicago sales tax securitization bonds can be found in the preliminary official statement, available on MuniOS.

As of October 2017, the Chicago-Naperville-Elgin, IL-IN-WI Metropolitan Area has an unemployment rate of 4.7%, which is 0.6% higher than the national rate for October, and 0.5% lower than at the same time in 2016. The chart below (click to expand) shows the Chicago metropolitan area, State of Illinois, and U.S. unemployment rates for the past ten years. MuniNet provides this data and more, easily accessible, for all 50 states and each Metropolitan Statistical Area in the country, in our Employment Database.chicago sales tax securitization bonds

illinois sales tax securitization bonds

Provided at left (click to expand) is a quick snapshot of financial characteristics of the State of Illinois as of 06/30/2016, compared with the medians for other U.S. States for 2015-2016, as well as those of the City of Chicago as of 12/31/2015, compared with the Median for other U.S. cities for 2014-2015, courtesy of Merritt Research Services, LLC. We have included both Illinois and Chicago, because the security of the bonds includes both Home Rule Sales Tax Revenues as well as Local Share Sales Tax Revenues. Looking at the debt ratios for Illinois, total direct debt per capita is more than double the median for U.S. States, and the total direct debt as a percentage of personal income is nearly double the state median. Merritt has many of the sector medians publicly available and regularly updated on their Benchmark Central page. (Merritt believes the data to be reliable but does not make any representations as to its accuracy or completeness)In addition to the Merritt information related to the featured bond, more information can be found on our municipal bond calendar,  city, state, and county pages, and our employment database.

These facts and numbers are for informational purposes, and should not be considered an official disclosure for potential investors. Investors should consult the official statement. None of the information provided should be construed as a recommendation by MuniNet Guide, MuniNet LLC, Merritt Research Services LLC, or any of their employees. Information and analysis is for informational purposes only.

by Jeffrey L Garceau