City sells $1.16B in bonds, but pays a heavy price
Chicago sold $1.16 billion in general obligation bonds Thursday, but paid a heavy price for a school financial crisis made worse by Gov. Bruce Rauner's veto of a bill promising $215 million in pension help.
The "spread" between Chicago's interest rate and the interest rate the city would have paid if it had a AAA bond rating ranged from 3.3 percent to 3.5 percent, according to Matt Fabian, a partner at Municipal Market Analytics.
Fabian called it the "worst spread" in recent memory on a city bond deal.
Even more surprising was the fact that the interest rate on Chicago's general obligation bonds was a "full percentage point" higher than it was a year ago -- before the City Council approved Mayor Rahm Emanuel's plan to slap a 29.5 percent tax on water and sewer bills to save the largest of four city employee pension funds.
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