Chicago School Bonds Drop to 14-Week Low as Governor Denies Help

Bloomberg reports:

The public school system known as CPS has said it needs $480 million from the state to close a budget gap and will face cuts and “unsustainable” borrowing without the funds. Chicago Mayor Rahm Emanuel and CPS Chief Executive Officer Forrest Claypool have called for the help, saying the system receives less state money than other Illinois districts. CPS is the only state district that pays for its teachers pensions. Rauner has said he’ll help out only if Emanuel supports structural changes that he has proposed such as limits on collective bargaining.

“Let’s be clear Chicago Public Schools are in dramatic trouble,” Rauner told reporters on Monday. “They’re looking at a disaster somewhere in the next nine months in the Chicago public schools.”

The Chicago Board of Education’s federally tax-exempt, general obligation bonds traded for an average of 82.45 cents on the dollar on Monday, the lowest since Sept. 28, to yield 6.4 percent, according to data compiled by Bloomberg. The securities, the most-actively traded over the last three months, have a 5 percent coupon and mature in December 2042.

The great moments of Blue America.