Chicago Freefall
"This is an unfortunate wake-up call for anyone still asleep over the fiscal cliff facing the city of Chicago."
(Laurence Msall)
News released last week:
Chicago drew closer to a fiscal freefall on Friday with a rating downgrade from Moody's Investors Service that could trigger the immediate termination of four interest-rate swap agreements, costing the city about $58 million.
The downgrade to Baa2, just two steps above junk, and a warning the rating could fall further still, means the third-biggest U.S. city could face even higher costs in the future if banks choose to terminate other interest-rate hedges against fluctuations in interest rates.
What a mess.
Chicago is a mess. And the mother ship (Illinois) is a mess.
Perhaps the most striking comment from this article:
Some Chicago debt is trading at worse levels than bonds sold by Illinois, which is paying the biggest yield penalty among states in the U.S. municipal bond market due to its own fiscal woes.
Worse than Illinois??!!??!!
Not good, folks.
Out for now......
Matt
