Published On: Mon, Mar 2nd, 2015

Mayor Rahm Emanuel Cross over Moody’s Downgrade of Chicago Ahead of Run-Off

Rahm Emanuel's team says Moody's is out of step with other ratings agencies

Rahm Emanuel

With Jesus “Chuy” Garcia nipping at Chicago Mayor Rahm Emanuel’s heels after getting just 45% of the vote and facing a runoff, a Moody’s downgrade of the Windy City’s rating was the last thing Rahm needed.

The ugly truth is the Moody’s downgraded Chicago’s rating to Baa2, just two notches above a junk rating over city pensions. The ratings cut could lead to the termination of four interest rate swap agreements, which could cost Chicago $58 million, according to CS monitor. The unpaid pension liability is $32 billion or eight times the city’s operating revenue.

This is good news for Jesus “Chuy” Garcia, who received 34% of the vote. The first ever mayoral run-off will be on April 7th, and Garcia has said that the drop in Moody’s rating is a direct reflection of Emanuel’s performance. According to International Business Times, Garcia said it was an “objective judgment on Emanuel’s lack of financial stewardship.” Emanuel’s office shot back that Moody’s ratings were not consistent with Standard & Poors, and that Moody’s is “substantially out of step” with other benchmarks, ignoring progress that has been achieved.”

The question is where is the progress and can Rahm’s well-funded team convince Chicagoans of this “progress” before April 7.

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