– Chicago Credit Risk Soars On Rahm Emanuel’s Re-Election (ZeroHedge, April 18, 2014):
It appears the re-election of Rahm Emanuel as Chicago Mayor has done nothing to assuage concerns about the city’s insolvency. As Emanuel’s victory became more assured, credit risk (measured by the spread between Chicago Muni yields and Treasury yields) has soared from 180bps to over 240bps.
Furthermore, it has accelerated even more since the April 7th election. Recent statements by S&P that if the city fails to articulate & implement a plan by the end of 1015 to sustainably fund pension contributions, or if it substantially draws down reserves to fund contributions, they will likely lower the rating; has not helped (given that Moody’s already have Chicago at Baa2 – just 2 notches above junk).
Chart: The Economist