NEW YORK (NY)
Moody’s via Yahoo Finance
December 9, 2020
Rating Action: Moody’s downgrades Catholic Bishop of Chicago (IL) to Ba1; outlook stable
Moody’s Investors Service has downgraded Catholic Bishop of Chicago (CBC or Archdiocese) to Ba1 from Baa1, affecting approximately $130 million of general obligation notes outstanding. The outlook remains stable.
RATINGS RATIONALE
The downgrade to Ba1 is largely driven by our view of escalating core social and business risks across the sector driven in large part by sexual abuse claims leading to an increasing trend of preemptive bankruptcy. This pattern is not correlated with the soundness of financial operations, balance sheets and other credit fundamentals.
The Ba1 is supported by the Archdiocese of Chicago’s financial reserves, scale, and strong management, all providing significant capacity to manage currently known exposures. Management has clearly articulated and well-defined plans for addressing financial risk associated with sexual abuse cases as well as the coronavirus pandemic. The management team’s strong transparency provides management credibility, a credit supportive governance consideration. However, the Archdiocese is one of the subjects of an ongoing investigation by the Illinois attorney general that may contribute to growth in sexual abuse claims. While current projections of sexual misconduct claims, which arise from decades-old alleged incidents, appear to be manageable, their full impact and their implications for defensive filing introduce an element of unpredictability, limiting the rating.
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