Fitch Ratings on Monday downgraded Chicago's credit rating closer to "junk," citing last week's state Supreme Court ruling that voided a law aimed at boosting funding for two of the city's pension funds.
Fitch called Thursday's ruling "among the worst of the possible outcomes for the city's credit quality," while warning the rating could be downgraded further in the absence of "a realistic plan that puts the pension funds on an affordable path toward solvency."
"Not only did (the Illinois Supreme Court) strike down the pension reform legislation in its entirety, but it made clear that the city bears responsibility to fund the promised pension benefits, even if the pension funds become insolvent," Fitch said in a statement.
The two-notch rating downgrade to BBB-minus, which is one step above "junk," affects $9.8 billion of the city's general obligation bonds and $486 million of sales tax revenue bonds. Chicago's credit rating with Moody's Investor Service is already in the "junk" level.
Standard & Poor's lowered its rating to BBB-plus from A-minus in July.
Created
