Moody's Investors Service's new methodology for bonds backed by special tax revenues prompted it to put Chicago's Aa2 sales-tax-backed rating on review for a possible downgrade.
The action affects $350 million of outstanding debt.
"The conclusion of this rating review will be based on our evaluation of the degree of legal separation the sales-tax revenue stream has from the general government of the city of Chicago, which carries a general obligation rating of Aa3 with a stable outlook," Moody's wrote in its review last week.
The new special tax methodology applies to more than 425 state and local government bond issuers with over $200 billion in debt outstanding.
