The bond rating that determines city borrowing costs stands a “one-in two-chance” of being lowered in the next 90 days because of Chicago’s “heavy reliance on one-time” revenues and a “politically charged stand-off” between Mayor Brandon Johnson and the City Council, a Wall Street rating agency warned this week. Standard & Poor’s decision to place the city on what it calls “CreditWatch” — even while reaffirming the city’s BBB+ rating — could raise the interest rate by roughly one-quarter of one percentage point. And while the market will “assume” the city’s rating has been lowered even before that actually happens, a municipal bond expert said, the impact will be relatively negligible on $110.
5 million in general obligation bonds. The increased borrowing cost on the city’s upcoming plan to refinance $1.5 billion in bonds could be substantial, however.
That small percentage increase could cost Chicago taxpayers $160 million in the long run — $4 million a year over 40 years. Standard & Poors is sounding an “alarm bell that the City Council needs to hear,” said Matt Fabian, a partner in Municipal Market Analytics, an independent research group on municipal bonds. “Municipal bond interests are screaming to Chicago to balance its budget in a responsible way and not rely on gimmicks and one-shots — like the [refinancing] and the plan to put all [$110 million] of the savings into the first two years,” Fabian told the Sun-Times.
“The ci.
