Moody’s Downgrades Chicago’s Credit Rating Yet Again, Issues Negative Outlook

Chicago’s financial health is still pretty bleak in 2015.

Almost one year ago to this day, I blogged about bond credit rating giant Moody’s Investor Service downgrading the City of Chicago’s general obligation (GO) and sales tax ratings to Baa1 from A3, affecting $8.3 billion of GO and sales tax debt. I added last March:

According to Moody’s, “Obligations rated Baa are judged to be medium-grade and subject to moderate credit risk and as such may possess certain speculative characteristics.”

Just before the weekend, Moody’s downgraded Chicago’s credit rating yet again. The Global Credit Research division announced on the Moody’s website under “Ratings News” Friday:

Rating Action: Moody’s downgrades Chicago, IL to Baa2; maintains negative outlook

Baa2 applies to $8.3B of GO debt, $542M of sales tax debt, and $268M of motor fuel tax debt

New York, February 27, 2015 — Moody’s Investors Service has downgraded to Baa2 from Baa1 the rating on the City of Chicago, IL’s $8.3 billion of outstanding general obligation (GO) debt, $542 million of outstanding sales tax revenue debt, and $268 million of outstanding or authorized motor fuel tax revenue debt. We have also downgraded to Speculative Grade (SG) from VMIG 3 the short-term rating on the city’s outstanding Sales Tax Revenue Refunding Bonds, Variable Rate Series 2002. The outlook on the long-term ratings remains negative…

“The outlook on the long-term ratings remains negative”

Kind of hard to get excited about the “Windy City’s” prospects after reading that.

To be fair, some are suggesting the credit rating downgrades are being influenced by City Hall in order to avoid meeting certain financial obligations (i.e., Chicago’s well-publicized public pension crisis).

“We ain’t got it.”

You can read the entire Moody’s press release on their website here.

Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

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