May 15--A second major debt rating agency has lowered Chicago's creditworthiness by two notches, but kept it three steps above the junk-level status assigned earlier this week by Moody's Investments Service.
In lowering Chicago's debt rating Thursday, Standard Poor's noted the Moody's action by saying the junk status rating affected "the city's ability to implement timely solutions to its structural budgetary problems."
Specifically, Standard Poor's cited Mayor Rahm Emanuel's plans to convert debt with fluctuating interest rates to fixed-rate bonds to help stabilize city finances, saying that effort could be jeopardized by the Moody's action. Emanuel has blasted Moody's downgrade as "irresponsible."
If the city can't implement the plan, and other lenders called in additional debt, the city could fall short of cash to cover its debts, Standard Poor's concluded. That, in turn, could result in further downgrades, it added.
The latest bad news at City Hall came after Moody's downgraded the city's credit Tuesday and followed up Wednesday with a downgrade to Chicago Public Schools and the Chicago Park District.
hdardick@tribpub.com
