Chicago’s rating downgrade on Friday by Moody’s Investors Services to Baa2 could trigger the immediate termination of four interest-rate swap agreements according to an article by Reuters. The termination could cost the City $58 million and raise the specter of additional termination events.
Chicago has a $300 million structural deficit and is required by Illinois law to boost the 2016 contribution to its police and fire pension funds by $550 million. Illinois Governor Bruce Rauner has proposed a plan that would cut Chicago funding by $210 million between July 1 and the end of 2016.
