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Chicago Mulls Borrowing That Puerto Rico Rejected as Risky

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Chicago may allow the use of a type of debt that’s fallen out of favor in other municipalities because it saddles taxpayers with higher costs by delaying payments.

Mayor Rahm Emanuel proposed issuing $500 million of bonds this week in an ordinance that would permit the use of capital appreciation bonds, where borrowers postpone interest and principal payments into one sum at the end of the term. Emanuel’s pitch also allows for the more common current interest bonds, which the city said it expects to use.