Chicago May Owe Wall Street $58 Million After Moody's Rating Cut

The outlook remains negative, signaling more cuts are possible, underscoring the city’s fiscal stress as Mayor Rahm Emanuel faces a runoff election. “This is a very significant, negative development for the city of Chicago’s financial position,” Laurence Msall, president of the Civic Federation, a nonpartisan research group in Chicago, said in an interview. Most swaps can be ended if one party fails to maintain a minimum credit rating, requiring payment of the entire amount due. Chicago has 15 agreements tied to variable-rate general-obligation debt and one to variable-rate sales-tax bonds, according to Moody’s. While the company said the city has the resources to cover the $58 million payment, it said the cut moves Chicago closer to further termination payments triggered by going below Baa2 or Baa3.



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