In the same week that Moody’s Investors Service downgraded Chicago’s bond rating and the debt of both the Chicago Public Schools and the Chicago Park District to junk status, Standard & Poor’s also lowered its status of the city’s bonds.
Standard & Poor’s announced Thursday that its rating of Chicago’s general obligation bonds had dropped from an A+ to and A-, three steps above junk level.
While the rating drop isn’t quite as bad as Moody’s downgrade, Standard & Poor’s also placed the city’s ratings on CreditWatch with “negative implications.”
"The rating action reflects our view that city's efforts are challenged by short-term interference that prevents a solid and credible approach at this time," Standard & Poor's credit analyst Helen Samuelson said in a statement. "That said, we recognize that the city has a diverse tax base and a management team that has good policies in place. These are an important foundation for any city that needs to address the challenges that this city is facing."
Standard & Poor’s noted the city would need to “address its liquidity pressures” or face further downgrades.
The move comes days after Moody’s lowered Chicago’s credit rating to junk status.
Moody's noted the city's options for curbing growth in its unfunded pension liabilities was hurt by an Illinois Supreme Court decision and said the costs of servicing its unfunded liabilities will place "significant strain on the city's financial operations absent commensurate growth in revenue and/or reductions in other expenditures."
Local
Emanuel said Moody's is out of step with other rating agencies and ignores the city's progress in dealing with its financial liabilities.
