Chicago Mayor Emanuel Pushes Moody's To Rescind Junk Rating Ahead Of $1.2 Billion New Issue

Tyler Durden's picture

One week before Chicago is set to sale $1.2 billion in new debt, it has been revealed that Mayor Rahm Emanuel has been putting pressure on Moody's, the only rating agency to have a junk-rating on the city's general obligation debt, to rescind their rating.  According to a letter Emanuel sent to the CEO of Moody's, the Chicago Mayor has grown concerned that the "Moody’s rating methodology and agenda are far from objective and independent."  Per Bloomberg:

Mayor Rahm Emanuel, a Democrat who pushed through a record tax increase to shore up the city’s finances, asked the company to pull its junk rating on Chicago’s debt, saying it’s exaggerating the risks to bondholders and failing to recognize steps he’s taken. Chicago has already stopped hiring Moody’s to rate new bond deals, relying instead on rivals S&P Global Ratings and Fitch Ratings that continue to consider its debt investment grade.


“It has become increasingly clear that Moody’s rating methodology and agenda are far from objective and independent,” Emanuel said in a Dec. 8 letter to Moody’s Chief Executive Officer Raymond McDaniel that was released by the city. “Your current rating does not accurately reflect the city’s credit or our ability to pay debt service when due.”


Chicago became the only major U.S. city outside of Detroit with a junk rating in 2015, when Moody’s downgraded it because of the escalating pension bills triggered by years of failing to set aside enough money to cover promised benefits.

Moody's is currently the only rating agency with a junk rating on Chicago's G.O. debt, Fitch is only 1 notch away with a BBB- rating, while S&P remains at BBB+.

Chicago Ratings


And while Emanuel would like for everyone to believe that Moody's "flawed" rating methodology is the only thing pushing Chicago's debt spreads higher...

Chicago GO


...we suspect that the city's massive budget deficits and underfunded pension liabilities may have a little more to do with it. 

And while we would never dare challenge the financial literacy of Chicago's esteemed mayor, a $5.4 billion deficit, when the city only generates $8.9 billion of annual tax revenue, would seem, at least to us, to be a slight problem.  Of course, we acknowledge that Democrats are known for their ability to raise taxes, but somehow we suspect they may object to the 60% across-the-board increase that would be required to close that budget gap.  Per the City Of Chicago:

Chicago IS


Moreover, we suspect that Moody's may have also been concerned with this lovely chart from the City of Chicago's Investor Presentation.  Certainly, a pension funding ratio that has declined pretty much every year for the past 15 years is not the sort of thing that inspires an investment grade rating.  And, while a mere $22.5 billion underfunding may not seem like such a big deal to Rahm, we doubt that Chicago's 1mm households are anxious to fork over $22,500 each to fill that gap.

Chicago Pension


And not to beat a dead horse, but nearly $1 billion of G.O. fixed charges every year, or 11% of your annual revenue, is also not stellar. 

Chicago Debt Services


But sure, Rahm, Moody's probably just has a personal vendetta against you.  We're sure that the 1 resident your state is losing every 4.6 minutes also has absolutely nothing to do with the fact that your city is on the verge of bankruptcy.

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HedgeAccordingly's picture

The Ponzi rolls on. 4,000 murders later and Rahm stil torpedoing the future the fiscal future of cook co.

overbet's picture

You gotta love the pay the rating agency model.


He looks like check cashing store clientele. He should apply there. 

johngaltfla's picture

I would think CC is more reflective of reality in America's Murder Capitol.

espirit's picture

Invest in Chicago Muni's?

Fuck, I just pissed myself.

JamesBond's picture

everyone has their price. moody is just negotiating it.


NoDebt's picture

Rahm, I'm gonna tell you right now that Moody's rating on your worthless debt is irrelevant.  Nobody believes the ratings agencies any more.  The big boys do their own research and they're not going to touch it with a 10 foot pole because you're dead broke and everyone knows it.

What WILL happen is the big boys will buy it cheap and sell it to the little boys with a helalthy markup based on whatever fraudelent rating you eventually get Moody's to stamp on it.  Those relying on ratings agencies to determine what is/is not worthy of their investment will get screwed.  Those who know better will profit.

What this means to you, Rahm, is that your city will be selling it's debt at a CCC price no matter what Moody's says your credit rating is.  You're gonna lose, too, motherfucker, just like the dumbasses who buy it in the aftermarket from those who know better and make a market in your securities.

Go win your little pointless war, Rahm.  You will lose no matter what the outcome.


Déjà view's picture

'Moody' concerning Chicago debt...while 'Feral Gov' receives free pass...

OfAllElaboratePlans's picture
OfAllElaboratePlans (not verified) overbet Jan 11, 2017 9:29 PM

He should run for mayor of Tel Aviv and turn that into a shithole like Chicago (but Israel wouldn't never allow that many kneegrows)

Offthebeach's picture

Do you think every now and then he pulls out his old pink ballerina shoes, thinks of some handsome other male ballerina, and the life they could of had in PTown or Key West?

db51's picture

Build a fucking wall....on the S Side of Chicago, about I-80.  Fuck you Rahm you fucking gaytard ballerina buttfuck boy

2_legs_bahhhhhd's picture

junk rating is a little harsh, it's only 22 billion

db51's picture

My sorry ass lives in SE Illinois, and it irks my ass to see the fucking .gov IL corruption and all our tax dollars going to fund the fucking union thugs and .gov workers.  Fucking IDOT...  What is orange with four wheels and sleeps six....and fucking IDOT crew cab pickup.  Lazy ass entitled motherfuckers, and then the fucking nigs, druggies, tattooed ass mother fucking baby popping little cunts....especially the fat white nig fucking cunts living off of our dime.  Fuck Illinois, Fuck you Rahm...if you had to give the USA an enema....the fucking tube would go straight into Illinois.   I pray the New Madrid fault opens up and swallows the whoel fucking with it...I'm willing to take one for the team.


PS...excuse the f bombing....I read where really intelligent people use alot of curse I thought I'd up my game to Mensa status

Hal n back's picture

Se illinois. Would you be near metropolis?

consider me gone's picture

Your last sentence will live through the ages. Well done.

SHADEWELL's picture

I say

This fellow Emanuel Is a very dark and very evil gay cunt

IntTheLight's picture

His grandfather a gangster. I'm guessing finger cut off as a warning.

Hal n back's picture

Compared to his brother Zeke, Rahm is a pleasure.

besnook's picture

chicago deserves that little fucking zionazi weasel. chicago 2017 is nyc 1977, bankrupt.

peddling-fiction's picture

Just as violent as well. No coincidence.

Dilluminati's picture

Bonds from Chciago?


whats backing these bonds the tax receipts of the murdered?

gatorengineer's picture

How in the hell does Shitcago only get a Billion in property taxes?  In eastern Pennsyltucky my subdivision of 100 very very modest homes by todays standards knocks into the county over a million....

cry-me-a-libaturd's picture

i think moodys must have a 'rohm' weighting when they rate chicaaago!

NeedleDickTheBugFucker's picture

Rahm obviously received his economics / finance training from the venerable Dr. Krugman.  All Chicago debt liabilities are another person's assets.

Tristan Ludlow's picture

Money goes in and never comes out.  That is why they call it Shitcago.

hooligan2009's picture

rahm emmanuel and his fellow libtards have taen one of americas most strategically important cities and turned it into a cess pit of crime, corruption and murder - assisted by madgian of course.

if chicagoans ever stop to ask themselves what their city could be like without the odious business, taxes and heavily unionized labor, they might just find one of the best cities in the world

chance would be a fine thing when the swamp that spawned obama and emmanuel have citizens of chicago paying for every living expense and junket they can dream of.

bleh - chicago is already in default and held up only by fitch and S&P who are probably going to downgrade it to junk this year

hairball48's picture

Going be popcorn time for sure when all those Chicago public union members figure out just how screwed they're going to be when the Great Shitstorm of a Reset arrives---and those pension plans get monkey hammered.


Schlub's picture

Needs to be "repatriated", ASAFP !!

jmack's picture

Yea, if chicago has trouble paying the bonds, they can just kidnap some retarded kids and hold them for ransom.

wisehiney's picture

I'll give you 10 one one odds that Chitown pension funds buy it.

CHoward's picture

Take it like a MAN Rahm.  Bitch.

youarelost's picture

I wonder what Trump and Rahm talked about at Trump Tower a few weeks ago? 

Bay of Pigs's picture

Bend over Emmanuel, you're getting driven to Cleveland.

Skiprrrdog's picture

When Ream Emanuel and Barky ObuttPlug get together...I wonder who pitches and who catches...

hairball48's picture

ROFLAMO!!  Doesn't matter since they both are "versatile".



mountain99889's picture
mountain99889 (not verified) Jan 11, 2017 9:11 PM

Good Job - Rahm Emanual ran off to Israel to serve in the Israel Army during Gulf War 1 - such Patriotism - (doing my best to imitate Trump tweets, Trump the master of tweets)

Placerville's picture

Dude, you're broke!

Junk is in the eye of the beholder.

Try the Sanford & Son rating agency. I'm sure you can get some AAA's for your crap.

Maybe  some clawbacks from those still living, non incarcerated, Free Shit Army citizens will help.

scoutshonor's picture

Well there is the argument to be made that with the murder rate as high as it is that fixed costs continue to decline.

gatorengineer's picture

Rahm and Chicongo were probably the biggest loosers in the Shitlery not winning election.  Nobody to bail his ass out now.... its just a matter of time

yogibear's picture

Yeah, Moodys, that rating agency that rated junk bonds as AAA.

Nice going Moodys and Mark Zandi. Deception bigtime.

Rate Shitcago as AAA so they can get better rates when their junk.

HRH Feant's picture
HRH Feant (not verified) Jan 11, 2017 9:16 PM

Start selling shit. And too bad. When your credit rating sucks you have to pay more interest. Get over it. That's reality.

McDuff71's picture

...i mean who gives a shit what Moodys rates anyway - those incompetent knob jockeys rated all that subprime pre GFC market debt as 'best quality' nicest smelling stuff you had to hold before everything went totally tits up...sheisters then and now...that said o'l windys flat out broke!! - who'd wanna hold those i.o.u's ?!?!?!? not me - nuff said...

Nobodys Home's picture

I'd gladly pay you maybe someday for a Hamburger today.