Tags: fitch | chicago | downgrade | rating

Chicago Has Credit Rating Cut by Fitch on Pension, Budget Woes

Monday, 11 Nov 2013 11:49 AM

Chicago, the third-most-populous U.S. city, had its credit rating lowered three steps on more than $8 billion of debt by Fitch Ratings, which cited the city’s growing unfunded pension liability.

Fitch cut the rating on $8 billion of Chicago’s general- obligation bonds to A-minus from AA-minus, the New York-based company said late Friday in a statement. It also took the same action on $500 million of debt backed by the Windy City’s sales taxes.

It’s the second three-step rating cut for Chicago since July, when Moody’s Investors Service lowered its grade to A3, the fourth-lowest investment-quality category, citing pension burdens and the costs of crime. Mayor Rahm Emanuel, a 53-year-old Democrat, has proposed raising the city’s cigarette sales tax by 75 cents a pack to help close a deficit of $339 million.

Chicago, a city of more than 2.7 million residents, is projecting a budget deficit of as much as $1 billion in 2015 unless the Illinois legislature restructures the public-pension system, which is a state creation. Lawmakers adjourned their fall session Thursday without taking any action.

Sarah Hamilton, a spokeswoman for the mayor, didn’t immediately respond to an e-mail seeking comment on the Fitch downgrade sent after normal business hours.

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Chicago, the third-most-populous U.S. city, had its credit rating lowered three steps on more than $8 billion of debt by Fitch Ratings, which cited the city's growing unfunded pension liability.
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Monday, 11 Nov 2013 11:49 AM
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