Chicago credit ratings downgraded due to pension debt

Chicago's credit rating has been lowered to one step above junk grade by Fitch Ratings.

In downgrading the city's rating, Fitch cited the Illinois Supreme Court decision a week ago throwing out Mayor Rahm Emanuel's reform plan for two city pensions.

Fitch lowered Chicago's rating from "BBB+" to "BBB-."

The agency called the court ruling "was among the worst of the possible outcomes for the city's credit quality."

"The rating could stabilize at 'BBB-' if the city presents a realistic plan that puts the pension funds on an affordable path toward solvency," Fitch said. "The lack of such a plan would likely result in a downgrade."

Lower credit ratings usually lead to higher borrowing costs.

For more details, check <URL destination="http://chicago.suntimes.com/politics/fitch-cuts-chicagos-credit-rating/">chicago.suntimes.com.