Cold: Moody’s downgrades Chicago’s rating to Baa2

Cold: Moody’s downgrades Chicago’s rating to Baa2

[Ed. – Don’t they know Rahm Emanuel is fighting for his political life??]

Moody’s Investors Service has downgraded Chicago’s credit rating to two levels above junk status, citing the city’s $20 billion mountain of unfunded pension liabilities.

The agency said Friday that it lowered the rating on $8.3 billion in general obligation debt from Baa1 to Baa2. Moody’s also maintained its negative outlook for Chicago, indicating another downgrade could occur even if recent efforts to address the city’s pension problems survive legal challenges.

“Regardless of outcome of the legal challenges to pension reforms, we expect Chicago’s unfunded pension liabilities — and the costs of servicing those liabilities — to continue to grow, placing significant strain on the city’s financial operations,” Moody’s said. …

Emanuel’s office also sought to cast Moody’s as out of step, noting that other ratings services reaffirmed Chicago’s bond rating.

Chicago has the worst-funded pension system of any major U.S. city, with a roughly $20 billion hole in four accounts.

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