Moody's downgrades Chicago credit rating over pensions - again - Dallas News |

Moody's downgrades Chicago credit rating over pensions - again

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CHICAGO (FOX 32 News) -

Chicago's credit rating has taken another major hit. Moody's Investors Service downgraded the city's credit rating on $8.3 billion in debt from A3 to Baa1, citing the city's unfunded pension liabilities.

Baa1 is just three notches above junk bond status. The city's credit rating lowered three notches for the same reason in July of 2013. Moody's said if there's no pension fix, another downgrade could occur.

Moody's said Chicago's pension liabilities "threaten the city's fiscal solvency" unless major revenue and other budgetary adjustments are adopted soon and are sustained for years to come. A commitment to increasing tax revenue is one thing that could raise the rating.

Chicago now has the lowest rating of any major city except Detroit, which is in bankruptcy. This means the city will have to pay higher interest rates on loans.

City of Chicago Chief Financial Officer Lois S issued this response to the downgrade:

"As noted by other rating agencies as recently as last week - and by Moody's in a previous report - Chicago's economy is strong and growing, and the investments in our City since Mayor Emanuel took office point toward a bright future for Chicago. But make no mistake, meaningful pension reform is critical to securing that future."

The Associated Press contributed to this report.

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