Posted: Feb 28, 2015 9:48 AM CSTUpdated: Feb 28, 2015 9:48 AM CST
CHICAGO (Sun-Times Media Wire) -
Chicago's plummeting bond rating took center stage in the race for mayor Friday after a Wall Street rating agency dropped it another notch — to two levels above junk status — citing Chicago's $20 billion pension crisis.
The decision by Moody's Investors Service to drop Chicago's rating for a fifth time under Mayor Rahm Emanuel — from Baa1 to Baa2 — may cost the City of Chicago tens of millions of dollars, the Sun-Times is reporting.
As a result of the downgrade, the city is on the hook to pony up $58 million under agreements covering existing debt, according to Laurence Msall, president of the Civic Federation. While city officials can try to renegotiate those agreements, a City Hall spokeswoman had no immediate comment on the matter Friday night.
In addition, the taxpayers “will pay a significant premium for future debt,” including both short-term debt used to fund operations and long-term borrowing used to fix and build city infrastructure.
But the entire cost of the downgrade “will not be known until the city issues new debt,” Msall said.
He noted that even before the downgrade, the state of Illinois had the lowest credit of all 50 states, and the city of Chicago had the worst credit rating of any major municipality except Detroit.
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