The Chicago Way: City knifes Moody's for junk bond rating

That'll teach Moody's Investment Services to downgrade Chicago's bonds to junk level. Mayor Rahm Emanuel's administration decided not to hire Moody's to rate the city's latest, $800-million general obligation bond issue.

Instead, it is giving the lucrative business to Moody's investors--Standard & Poor’s Ratings Services, Fitch Ratings and Kroll Bond Rating Agency Inc., reports the Wall Street Journal. It should be noted that Standard & Poor's disagreed with Moody's by recently giving Chicago a credit rating that's four notches above Moody's.

It should be noted that Emanuel decided to delay borrowing $383 million that would pay off previous bond issues to get a better rate. Chicago has planned to convert about $900 million of variable rate bonds to fixed rate debt. Pushing Chicago into action is the right of banks to call in their debt, forcing the city to cough up money that it doesn't have.

Moody's discovers what every Chicagoan already knows: Don't cross the city or you'll pay dearly. Hell hath no fury like a Chicago scorned.

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