Moody's Downgrades Chicago Credit Rating to Junk Bond Status

CHICAGO (AP) — Moody's Investors Service has lowered Chicago credit rating to junk bond status, a move Mayor Rahm Emanuel is calling irresponsible.

In making the decision Tuesday, Moody's noted the city's options for curbing growth in its unfunded pension liabilities was hurt by an Illinois Supreme Court decision.

The court on Friday struck down a state law that restructured the state of Illinois' pension obligations.

The decision by Moody's means the cost of borrowing by Chicago will increase.

In their announcement, Moody's noted the costs of servicing its unfunded liabilities will place "significant strain on the city's financial operations absent commensurate growth in revenue and/or reductions in other expenditures."

Emanuel said Moody's is out of step with other rating agencies and ignores the city's progress in dealing with its financial liabilities.