WBEZ | Moody's http://www.wbez.org/tags/moodys Latest from WBEZ Chicago Public Radio en Chicago moves closer to borrowing $1.1 billion http://www.wbez.org/news/chicago-moves-closer-borrowing-11-billion-112195 <img typeof="foaf:Image" src="http://llnw.wbez.org//main-images/rahmfile.jpg" alt="" /><p><p dir="ltr">The cash-strapped city of Chicago is one step closer to borrowing $1.1 billion in general obligation bonds, in an attempt to shore up the city&rsquo;s finances. The complex borrowing package, backed by Mayor Rahm Emanuel, passed through the city&rsquo;s Finance Committee Monday.</p><p dir="ltr">Pitched as a way to &ldquo;clean up&rdquo; the city&rsquo;s balance sheet and move away from unsustainable financial practices of the past, the bonds would convert some of the city&rsquo;s short-term debt into longer-term, fixed-rate debt, pay down city settlements, and refinance old terminated interest rate &ldquo;swaps,&rdquo; &nbsp;among other things.</p><p dir="ltr">The city&rsquo;s new Chief Financial Officer&nbsp;<a href="http://www.cityofchicago.org/city/en/depts/mayor/press_room/press_releases/2015/may/mayor-rahm-emanuel-names-carole-l--brown-as-city-of-chicago-chie.html">Carole Brown</a> told aldermen Monday that it would be &ldquo;irresponsible&rdquo; for the city not to sign off on this borrowing plan.</p><p dir="ltr">&ldquo;This is not kicking the can, this is not shuffling the deck chairs, this is a real step toward doing what I think all of you are committed to doing, and that you want to see us do, which is return to a state of more fiscal stability,&rdquo; Brown said. &nbsp;&nbsp;</p><p dir="ltr">According to Brown, the borrowing package is both part of the financial plan Emanuel pitched last spring, and a reaction to the recent credit rating downgrade by Moody&rsquo;s. Brown said the city is &ldquo;technically in default&rdquo; and &ldquo;there would be the potential that we would have to come up with close to $900 million to pay back the banks if we did not execute this transaction.&rdquo;</p><p dir="ltr">The city&rsquo;s plan for the $1.1 billion includes:</p><ul><li dir="ltr"><p dir="ltr">$170 million for the first two years of interest</p></li><li dir="ltr"><p dir="ltr">$151 million will be used to convert variable rate general obligation bonds into fixed rate bonds</p></li><li dir="ltr"><p dir="ltr">$192 million will be spent to end &ldquo;swaps&rdquo;</p></li><li dir="ltr"><p dir="ltr">$35 million will be used for the 2015 loan payment for the old Michael Reese hospital site</p></li></ul><p dir="ltr">Many aldermen were skeptical of the plan. Some voiced concern that there weren&rsquo;t enough diverse banks or firms involved in the deal. Others, like Ald. John Arena (45) were concerned that the city hasn&rsquo;t put forth any new revenue ideas.</p><p dir="ltr">&ldquo;We get fines here and fees here, we know it&rsquo;s not enough. Everybody knows it&rsquo;s not enough but ignores this issue. And when we have 1.1 billion dollars put in front of us, and say &lsquo;approve this&rsquo; without at least a look at a plan for revenue at this point...this is irresponsible,&rdquo; Arena said.</p><p dir="ltr">The lone no vote was cast by progressive Ald. Scott Waguespack. The full City Council is scheduled to vote on the package Wednesday.</p><p><em>Lauren Chooljian is WBEZ&rsquo;s city politics reporter. Follow her <a href="https://twitter.com/laurenchooljian">@laurenchooljian</a></em></p></p> Tue, 16 Jun 2015 00:06:00 -0500 http://www.wbez.org/news/chicago-moves-closer-borrowing-11-billion-112195 Moody's downgrades debt of 7 Illinois universities http://www.wbez.org/news/moodys-downgrades-debt-7-illinois-universities-108393 <img typeof="foaf:Image" src="http://llnw.wbez.org//main-images/moody&#039;s.png" alt="" /><p><p>Moody&#39;s Investors Service downgraded debt ratings on seven public Illinois universities, and warns more decreases could take place in the future.</p><p>The bond rating agency took the actions Friday, about two months after it warned it was reviewing all public universities in Illinois because of the state&#39;s precarious financial situation. The state of Illinois&#39; debt was downgraded in early June.</p><p>In Friday&#39;s downgrades, only Northern Illinois University maintained its debt rating.</p><p>The downgrades affect a combined $2.24 billion in debt, but most of that belongs to the University of Illinois.</p><p>In separate research notes, Moody&#39;s attributes its decisions on the state&#39;s history of unpaid bills and its $100 billion pension backlog.</p><p>UI spokesman Tom Hardy <a href="http://bit.ly/1685Uln">told The News-Gazette</a> the downgrade wasn&#39;t a surprise, but is still &quot;disappointing.&quot;</p></p> Tue, 13 Aug 2013 11:52:00 -0500 http://www.wbez.org/news/moodys-downgrades-debt-7-illinois-universities-108393 Moody's downgrades Chicago's debt rating http://www.wbez.org/news/moodys-downgrades-chicagos-debt-rating-108099 <img typeof="foaf:Image" src="http://llnw.wbez.org//main-images/AP100824123622 (1).jpg" alt="" /><p><p>Moody&#39;s Investors Service is downgrading its debt rating for Chicago because of the city&#39;s &quot;very large and growing&quot; pension liability.</p><p>The agency said late Wednesday it&#39;s lowering its rating of the nation&#39;s third-largest city from Aa3 to A3.</p><p>The ratings for general obligation debt and sales tax debt are still investment grade. But Moody&#39;s says the outlook is negative because of &quot;formidable legal and political barriers to pension reform&quot; in Illinois.</p><p>The downgrade affects $8.2 billion in debt and means it will cost more for the city to borrow money.</p><p>Moody&#39;s says Chicago has a $19 billion unfunded pension liability, and will face &quot;tremendous strain&quot; in future operating budgets as city officials try to meet funding requirements and public safety demands.</p><p>Illinois has a $97 billion pension shortfall.</p></p> Thu, 18 Jul 2013 09:20:00 -0500 http://www.wbez.org/news/moodys-downgrades-chicagos-debt-rating-108099 Illinois plans $800 million bond sale http://www.wbez.org/story/illinois-plans-800-million-bond-sale-95279 <img typeof="foaf:Image" src="http://llnw.wbez.org//story/photo/2012-January/2012-01-04/6289910064_3cfefc8825.jpg" alt="" /><p><p>The state of Illinois is hoping investors will snap up $800 million worth of bonds next week. The investment world has not looked kindly on Illinois bonds in recent years as the state has struggled with a mountain of debt. Moody’s rates Illinois bonds the worst in the country, tied with California, and Standard &amp; Poor’s rates the state second-worst.</p><p>But Illinois’s director of capital markets, John Sinsheimer, said he’s hopeful lots of investors will be interested in these bonds.</p><p>"We’ve seen a lot of changes in the state and its finances to the good, with the tax increases that were approved last year, so we would anticipate the bonds will be well bid," Sinsheimer said.</p><p>The state plans to use the money from next week’s sale for capital projects like building schools and fixing roads. Sinsheimer said Illinois will sell another round of bonds in March.</p></p> Wed, 04 Jan 2012 19:12:00 -0600 http://www.wbez.org/story/illinois-plans-800-million-bond-sale-95279 Joining Fitch, Moody's also affirms U.S. credit rating http://www.wbez.org/story/2011-08-03/joining-fitch-moodys-also-affirms-us-credit-rating-90036 <p><p>Echoing what <a href="http://www.npr.org/blogs/thetwo-way/2011/08/02/138929355/in-light-of-budget-deal-fitch-ratings-says-u-s-keeps-triple-a-rating">Fitch Ratings said yesterday</a>, Moody's Investor Service said it is keeping a triple-A credit rating for the United States. <a href="http://abcnews.go.com/Business/us-debt-rating-economists-wait-hear-sp/story?id=14212335">Bloomberg reports</a> that the announcement also came with a warning that a downgrade is still possible if the country doesn't take on debt reduction:</p><p><blockquote></p><p>The outlook for the U.S. grade is now negative, Moody's said in a statement yesterday after President <a href="http://topics.bloomberg.com/barack-obama/">Barack Obama</a> signed into law a plan to lift the nation's borrowing limit and cut spending following months of wrangling between Democratic leaders and Republican lawmakers.</p><p>The compromise "is a positive step toward reducing the future path of the deficit and the debt levels," <a href="http://topics.bloomberg.com/steven-hess/">Steven Hess</a>, senior credit officer at Moody's in New York, said in a telephone interview yesterday. "We do think more needs to be done to ensure a reduction in the debt to GDP ratio, for example, going forward."</p><p></blockquote></p><p>During the debt ceiling debate, all three major ratings agencies warned the U.S. that if it did not raise the debt ceiling and enact a deficit-cutting budget, it faced a downgrade of its triple-A credit rating.</p><p>Now, the only agency that hasn't made a statement after the budget deal was enacted by President Obama, yesterday, is S&P.</p><p><strong>Update at 7:54 p.m. Chinese Agency Cuts U.S. Rating: </strong></p><p>Dagong Global Credit Rating, which Reuters calls a "a relative newcomer to sovereign debt rating realm and little known outside of China," announced that it was downgrading the United States' rating from A-plus to A.<a href="http://in.reuters.com/article/2011/08/03/idINIndia-58591220110803"> Reuters reports</a>:</p><p><blockquote></p><p>It said the deal reached by Congress and signed into law by President Barack Obama may further erode the country's debt paying ability in the coming years, and the agency issued a negative outlook for the United States.</p><p></blockquote> <div class="fullattribution">Copyright 2011 National Public Radio. <img src="http://metrics.npr.org/b/ss/nprapidev/5/1312382364?&gn=Joining+Fitch%2C+Moody%27s+Also+Affirms+U.S.+Credit+Rating&ev=event2&ch=103943429&h1=National+News,Economy,The+Two-Way,Business,News&c3=D%3Dgn&v3=D%3Dgn&c4=138948269&c7=1017&v7=D%3Dc7&c18=1017&v18=D%3Dc18&c19=20110803&v19=D%3Dc19&c20=1&v20=D%3Dc20&c31=127602855,127602331,103943429&v31=D%3Dc31&c45=MDA0OTc2MjAwMDEyNjk0NDE4OTI2NmUwNQ001"/></div></p></p> Wed, 03 Aug 2011 06:40:00 -0500 http://www.wbez.org/story/2011-08-03/joining-fitch-moodys-also-affirms-us-credit-rating-90036 Illinois bond sale will test investor appetite http://www.wbez.org/story/bonds/illinois-bond-sale-will-test-investor-appetite <p><p>The State of Illinois will find out this week how willing investors are to buy the state&rsquo;s bonds, which are rated the lowest in the country by Moody&rsquo;s. The state plans to sell $3.7 billion worth of bonds as early as tomorrow to make this year&rsquo;s pension payment. &nbsp;<br /><br />Brian Battle is a director with the Chicago-based investment advisory firm Performance Trust Capital Partners. He says this move to pay current obligations with borrowing is just a short-term fix that does nothing to solve the state's longer-term pension problem. &nbsp;<br /><br />&quot;It&rsquo;s taking one credit card and paying off a different one,&quot; Battle says. &quot;You owe the money to the pension plan? Oh, now abracadabra, you owe the money to the bond holders. That is known as a budget gimmick. This is not known as a typical way to manage your pension liabilities.&quot; &nbsp;<br /><br />Battle says because the state&rsquo;s bonds are rated so poorly, Illinois will likely have to pay investors the highest interest rate of any state. <br /><br />And the sale won&rsquo;t do anything to fill the state&rsquo;s pension shortfall from prior years. That totals about $86 billion.<br /><br />&nbsp;</p></p> Tue, 22 Feb 2011 21:57:00 -0600 http://www.wbez.org/story/bonds/illinois-bond-sale-will-test-investor-appetite Illinois' debt burdens 5th highest in nation http://www.wbez.org/story/credit-rating/illinois-debt-burdens-5th-highest-nation <p><p><span style="font-size: 10pt; color: black;">A new report ranks Illinois fifth in the nation for having the largest combined pension and debt burdens per capita. The Moody's Investors Service report attempts to hone in on how pension liabilities will affect credit ratings. The report looks at metrics such as personal income, Gross Domestic Product, and debt as a percentage of state revenue to figure out state by state debt burdens. </span></p> <div><span style="font-size: 10pt; color: black;">Robyn Prunty is an Illinois analyst with a different credit rating service, Standard and Poor&rsquo;s.&nbsp;</span><span style="font-size: 10pt; color: black;">She says that company is keeping a close eye on the state's finances, but isn't sure whether Illinois will receive a credit downgrade. </span></div><div>&nbsp;</div><div><span style="font-size: 10pt; color: black;">&ldquo;The rating's not directly tied to pensions,&ldquo; she said, &ldquo;There's many other factors that we use in establishing our ratings. But certainly pensions have been a significant focus for Illinois.&rdquo;</span></div> <div>&nbsp;</div> <div><span style="font-size: 10pt; color: black;">Joshua Rauh is a professor of Finance at Northwestern&rsquo;s Kellogg School of Business. He is concerned that government accounting standards across the country grossly understate pension liabilities. Rauh said the methods endorsed by Government Accounting Standards Board are not endorsed by the majority of finance economists. According to Moody&rsquo;s report, Illinois debt burden per capita is close to $7,000, but Rauh said, &ldquo;What you find is Illinois actually has unfunded pension liabilities alone of over $200 billion. This adds up to an unfunded liability of over $40,000 per household.&rdquo; &nbsp;</span></div> <div>&nbsp;</div> <div><span style="font-size: 10pt; color: black;">Moody's ranking comes just after a recent Security and Exchange Commission&rsquo;s inquiry into claims Illinois officials made about savings resulting from recent pension reform. The SEC is looking into whether expected savings from recently passed legislation are accurate. Illinois officials are planning on selling off $3.7 billion in bonds on February 17th to cover this year&rsquo;s pension payment.&nbsp;</span></div></p> Fri, 28 Jan 2011 21:53:00 -0600 http://www.wbez.org/story/credit-rating/illinois-debt-burdens-5th-highest-nation New report highlights Illinois' state budget woes http://www.wbez.org/story/2011-budget/new-report-highlights-illinois-state-budget-woes <img typeof="foaf:Image" src="http://llnw.wbez.org//capitalsmall.jpg" alt="" /><p><p><!--[if gte mso 9]><xml> <w:WordDocument> <w:View>Normal</w:View> <w:Zoom>0</w:Zoom> <w:PunctuationKerning /> <w:ValidateAgainstSchemas /> <w:SaveIfXMLInvalid>false</w:SaveIfXMLInvalid> <w:IgnoreMixedContent>false</w:IgnoreMixedContent> <w:AlwaysShowPlaceholderText>false</w:AlwaysShowPlaceholderText> <w:Compatibility> <w:BreakWrappedTables /> <w:SnapToGridInCell /> <w:WrapTextWithPunct /> <w:UseAsianBreakRules /> <w:DontGrowAutofit /> </w:Compatibility> <w:BrowserLevel>MicrosoftInternetExplorer4</w:BrowserLevel> </w:WordDocument> </xml><![endif]--><!--[if gte mso 9]><xml> <w:LatentStyles DefLockedState="false" LatentStyleCount="156"> </w:LatentStyles> </xml><![endif]--><!--[if !mso]><object classid="clsid:38481807-CA0E-42D2-BF39-B33AF135CC4D" id=ieooui></object> <style> st1\:*{behavior:url(#ieooui) } </style> <![endif]--><!--[if gte mso 10]> <style> /* Style Definitions */ table.MsoNormalTable {mso-style-name:"Table Normal"; mso-tstyle-rowband-size:0; mso-tstyle-colband-size:0; mso-style-noshow:yes; mso-style-parent:""; mso-padding-alt:0in 5.4pt 0in 5.4pt; mso-para-margin:0in; mso-para-margin-bottom:.0001pt; mso-pagination:widow-orphan; font-size:10.0pt; font-family:"Times New Roman"; mso-ansi-language:#0400; mso-fareast-language:#0400; mso-bidi-language:#0400;} </style> <![endif]-->A new report by the National Conference of State Legislators described llinois' fiscal situation as dire.</p><p>The group surveyed budget conditions in each of the fifty states and Puerto Rico.</p><p>Laurence Msall is the president of the Civic Federation, he said the report does not exaggerate Illinois' problems, but he said, the state has a few options to help reduce the budget deficit.</p><p>&ldquo;What needs to happen is the state has to reduce the amount of money it&rsquo;s spending each year,&rdquo; he said. &ldquo;That&rsquo;s going to require cuts in programs. If it&rsquo;s not able to drastically reduce it&rsquo;s spending it&rsquo;s going to have to dramatically reduce its pension contributions.&rdquo;</p><p>State lawmakers are still debating a plan to sell more than $3 billion in bonds for state pensions. A report put out Monday by Moody's Investment Service warned such a bond sale could weaken the state's already fragile bond rating.</p></p> Wed, 08 Dec 2010 20:42:00 -0600 http://www.wbez.org/story/2011-budget/new-report-highlights-illinois-state-budget-woes