The Bond Buyer has an article which analyzes the increased disclosure in recent Chicago bond documents. The bond documents discuss the steep credit deterioration in the city’s credit worthiness and ratings. In addition, this expanded disclosure warns of the impact of even a one step downgrade leading to the potential for swap termination events.
The bond documents include the following comments:
“further reductions in the city’s general obligation debt credit rating could have significant adverse effects on the city’s financial condition, including its ability to borrow and service its debt obligations.”
The bond documents highlight the GO rating thresholds that can trigger default events on the city’s GO swap, liquidity facilities, letters of credit, commercial paper and lines of credit. This information that the city had not disclosed in the past.
