Chicago Issues AAA-Rated Debt Despite City's Junk-Rating
- New debt will have first claim on sales taxes from Illinois
- Borrowing is first stage of planned $3 billion refinancing
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Chicago will start selling as much as $575 million of investment-grade-rated debt that’s backed by a dedicated share of sales-tax revenue it receives from Illinois, insulating bondholders from the city’s financial strains.
The offering is the first by the Sales Tax Securitization Corp., which was created after Illinois enacted a budget this year that allows municipalities to sell debt backed by state funds they received. That added security allowed the bonds to receive an AAA grade by Fitch Ratings, nine steps higher than Chicago’s general obligations.