KBRA assigns a AAA rating, with a Stable Outlook to the State of Wisconsin's (the State's) General Obligation (G.O.) Bonds of 2024, Series A; G.O. Refunding Bonds of 2024, Series 1 and G.O. Refunding Bonds of 2025, Series 1 (Forward Delivery). Proceeds of the G.O. Bonds of 2024, Series A will fund various general governmental purposes, while the G.O. Refunding Bonds of 2024, Series 1 and 2025, Series 1 (Forward Delivery) will refund certain outstanding G.O. Bonds on a current or advanced refunding basis. The timing of any such issuance will be dependent upon market conditions.

In addition, KBRA affirms the long-term AAA rating with a Stable Outlook on outstanding G.O. Bonds and G.O. Flexible Rate Notes (FRNs); 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 December 15, 2023, the State had $6.8 billion of general obligations outstanding, including fixed rate G.O. Bonds, variable rate G.O. FRNs and EMCP Notes, and Variable Rate Demand Obligation (VRDO) 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

The rating actions incorporate the following 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 leased 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.

The Stable Outlook reflects KBRA’s expectation that the State’s fiscal discipline and economic resiliency will continue to support financial performance and reserve levels commensurate with the current G.O. rating level. Additionally, in KBRA’s view, there remains considerable incentive for the State to continue appropriating for assets under the Master Lease Program.

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.

A Rating Report will follow shortly. To access rating 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) is a full-service credit rating agency 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 by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized by the National Association of Insurance Commissioners as a Credit Rating Provider.

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