Bad news on Chicago is deep and broad:
The Chicago Public School System has a $1.1 Billion Budget Hole in $5.9 Billion Budget A $228 to $263 million derivative time bomb just triggered on the Chicago Board of Education Chicago Public Schools may be out of cash in 30 days Corruption investigations plague the school board Chicago booted Moody’s as a bond rater Roadblocks impair pension reforms by the Illinois legislature Rauner issued a statement he will not bail out Chicago on the backs of Illinois taxpayers Chicago teachers threaten strikes demanding more money that isn’t there Let’s investigate those ideas starting with the bond rating cuts that triggered the derivatives time bomb. Bond Rating Cuts
On March 9, Moody’s dropped Chicago School bonds two notches to Baa3, that last rank above Junk.
Chicago responded by dumping Moody’s in favor of little-known rating agency Kroll, essentially shopping around for better results.
This is the way the system works. Ratings agencies lose business if they do not rate bonds high enough.
This post was published at Global Economic Analysis on Monday, April 20, 2015.