By Ted Dabrowski
Illinois Policy
If current trends mean anything, it looks like Detroit and Chicago are trading places – at least financially.
On July 29, Detroit received an investment grade rating from Standard & Poor’s Ratings Services on a $245 million bond issue, just seven months after the Motor City exited from the nation’s largest-ever federal bankruptcy.
Chicago, on the other hand, is headed in the opposite direction. The city’s credit rating is in junk-bond territory after a series of recent downgrades. And it seems more downgrades are on the way.
Chicagoans may take solace in the fact that Detroit still has a long way to go before it’s out of the woods. The city’s $245 million bond issue received an investment-grade rating only because the income-tax revenue backing the bond will bypass city coffers and go directly to the bondholders. The city’s overall credit is still rated in junk bond territory at “B” – well below investment grade. But that’s still higher than its previous rating of “C.”
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