S&P lowers Chicago city government credit rating one notch

The Chicago Sun-Times reports:

Citing the lack of a long-term plan to fund pensions for city police and fire personnel, another financial ratings agency has lowered its credit rating for Chicago city government.

Standard & Poor’s Ratings Services announced Wednesday it lowered its rating on City Hall’s general obligation bond debt one notch, from ‘A-’ to ‘BBB+’ with a negative outlook. That’s still above its “junk” rating.

The move follows Moody’s Investors Service rating the city’s debt at junk status in May. The Moody’s downgrade contributed to city taxpayers being forced to accept higher interest rates on a $674 million borrowing deal that occurred shortly after the rating was issued.

S&P’s downgrade “is based on our view of the city’s structural imbalance, which we believe will necessitate the adoption of corrective budget measures over several years,” S&P credit analyst John Kenward said in a news release.

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