Fitch Ratings has assigned ‘AAA’ rating to two series of the City’s unlimited tax general obligation (ULTGO) bonds: $8 million general obligation bonds, series 2010A; and $8.5 million taxable general obligation bonds, series 2010B.
In addition, Fitch affirmed the AAA rating for $151.5 million outstanding ULTGO bonds and said, “The Rating Outlook is Stable.”
Fitch cited several reasons for the AAA rating, such as the “superior socioeconomic profile” of residents, which reflects “high wealth, employment and education levels” and the City’s “advantageous location,” which provides “abundant employment opportunities both within the city and throughout the Chicago metropolitan region,” despite the fact that “cyclical economic pressure is currently evident.”
A third rationale was the City’s financial stewardship – maintaining “sound reserves despite generating operating deficits after transfers for three consecutive years,” and taking “meaningful steps to restore long-term structure balance.”
Fitch also said, “The unfunded pension liability is notable” but added that one of its key rating-drivers was the “City’s ability to restore financial equilibrium while adequately addressing its severely under-funded pension system especially given the general malaise of the current economic climate.