Moody's downgrades Chicago debt to 'junk' (with negative outlook)
A municipal pension
as it extends and extends over time
can lead to lots of tension
and even thoughts of financial crime
as it gives bondholders a twist
they don't know now how to resist
The increased longevity
of former firemen, garbage collectors and such
is no matter for levity--
for Wall Street and Moody's don't like it very much.
So they've downgraded Chicago's bond status
from an already bad Ba1 to Baa2--
something like going from sh-t to flatus--
as far as payments go when due,
with a " negative outlook"
for ever getting off the hook.
So what is the remedy?
None that Moody's eye can see,
even though, according to its Mayor Rahm Emanuel
Chicago somehow will stay calm and can do well.
Perhaps he plans to introduce a death penalty--
this time applied to all ex-workers over seventy?
HZL
5/13/15
In the news
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A major rating agency downgraded the Chicago's ... making it more difficult for Mayor Rahm Emanuel to fix the ... Moody's lowered the city's rating two notches on all debt ...
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Skyline of Chicago
Moody's downgraded
Chicago's credit rating down to junk level "Ba1" from "Baa2."
The announcement, which the ratings agency released Tuesday afternoon, cited a recent Illinois court ruling voiding state pension reforms. Moody's said it saw a negative outlook for the city's credit.
Following that May court decision, Moody's said it believes that "the city's options for curbing growth in its own unfunded pension liabilities have narrowed considerably."
"Whether or not the current statutes that govern Chicago's pension plans stand, we expect the costs of servicing Chicago's unfunded liabilities will grow, placing significant strain on the city's financial operations absent commensurate growth in revenue and/or reductions in other expenditures," the agency said in a release.
The downgrade affected $8.9 billion of general obligation, sales, and motor fuel tax debt, according to Moody's.
The firm said its downgrades could trigger up to $2.2 billion in accelerated payments on Chicago debt.
—Reuters contributed to this report.
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