Moody’s downgrades Chicago credit rating to junk bond status

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CHICAGO (AP) — Moody's Investors Service has lowered Chicago credit rating to junk bond status, a move Mayor Rahm Emanuel is calling irresponsible.

Today city lawmakers are also criticizing the credit agency, claiming Moody's has failed to give credit to city solutions already on the table.

"This exacerbates the problem in a big way because we have to pay more, obviously, for interest ... for no reason," said Ald. George Cardenas (12th Ward).

"We're not Detroit. The city's doing well," Cardenas continued. "If you look at the center, it's doing well. We've got to make sure that success spreads out into the neighborhoods."

In making the decision Tuesday, Moody's noted the city's options for curbing growth in its unfunded pension liabilities was hurt by an Illinois Supreme Court decision.

The court on Friday struck down a state law that restructured the state of Illinois' pension obligations.

The decision by Moody's means the cost of borrowing by Chicago will increase.

In their announcement, Moody's noted the costs of servicing its unfunded liabilities will place "significant strain on the city's financial operations absent commensurate growth in revenue and/or reductions in other expenditures."

Emanuel said Moody's is out of step with other rating agencies and ignores the city's progress in dealing with its financial liabilities.

 

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