For anyone needing one more harbinger of dark days to come if Chicago doesn’t take on its public employee pension albatross, the Sun-Times served one up this week.
If the city’s already-low credit rating drops just one notch — highly likely if the city’s massive police and fire pension bills aren’t dealt with — the city could be on the immediate hook for $110 million, the Sun-Times’ Dan Mihalopoulos’ reported on Wednesday.
The bill could come due because of a financial arrangement, known as interest-rate swaps contracts, that the city has entered into with several banks to stabilize interest rates on about $3 billion of debt. The deals require the city to maintain a certain credit level. If Moody’s Investors Service drops Chicago a notch, the financial institutions involved could demand $110 million. Falling two more notches could add another $86 million for a grand total approaching $200 million.
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