Chicago’s credit rating takes a beating, Moody’s downgrades it to just above junk

rt.com Moody’s Investor Services has downgraded Chicago’s credit rating to the third-lowest level above “non-investment grade” based on pension liabilities, meaning the third-largest US municipality has the second-lowest credit score among major cities. The agency announced Tuesday it was dropping Chicago’s rating on around $8 billion in debt by one level – from A3 to Baa1. The move follows a three-step downgrade for the city in July. Dropping Chicago’s rating to three levels above junk-bond status “reflects the city’s massive and growing unfunded pension liabilities, which threaten the city’s fiscal solvency,” Moody's analyst Matthew Butler said in a report on Tuesday. “The size of Chicago’s unfunded pension liabilities makes it an extreme outlier.” Chicago’s pension debt is eight times more than its operating revenue, BusinessWeek reported. The city’s debt load tripled from 2002 to 2012. Moody’s warned that the city’s outlook remains negative, meaning its rating could fall further if the pension debt is not addressed through revenue boosts and other budgetary modifications. to read more: rt.com