Moody’s downgrades Chicago’s rating over pensions
Moody’s Investors Service has downgraded Chicago’s credit rating to two levels above junk status, citing the city’s unfunded pension liabilities.
The agency announced Friday that is has 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 if there’s no pension fix.
The agency said even if Chicago’s recent pension reforms survive legal challenges it still expects the $20 billion in unfunded pension debt to grow substantially.
Besides a pension solution, Moody’s says commitments to increasing tax revenue or cutting costs are among options that could boost the rating.
City Treasurer Kurt Summers says in response that Mayor Rahm Emanuel “has made significant progress” in addressing the pension challenges “without unfairly burdening taxpayers.”