Chicago Bonds Gain as City Plans Tax Hike to Fix Biggest Pension
- Under Emanuel’s plan, higher utility levy will shore up fund
- Most-actively traded debt jumped to highest since April 2015
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Chicago debt rallied after Mayor Rahm Emanuel released his plan to increase water and sewer levies to shore up the retirement plan for municipal workers, a move to avert insolvency for the city’s largest pension fund.
Without the fix, the fund that serves more than 70,000 workers and retirees is on track to run out of money within a decade. Less than a day after Emanuel laid out the plan at Chicago’s investor conference, the municipal market applauded the proposal. The city’s most-actively traded debt traded at 87.98 cents on the dollar Thursday, the highest average price since April 2015, according to data compiled by Bloomberg. The taxable debt that matures in 2042 yields 6.4 percent.