Moody's Investors Service said it has placed the city of Chicago's Ba1 general obligation (GO) rating under review for possible downgrade.

The action applies to $7.3 billion of outstanding GO bonds.

The Chicago skyline.
The Chicago skyline. Bloomberg News

Moody's has also placed under review for possible downgrade the Ba1 rating on $320 million of sales tax debt, the Ba1 rating on $260 million of motor fuel tax debt, the Baa1 rating on $26 million of senior lien water revenue debt, the Baa2 rating on $2 billion of second lien water revenue debt, the Baa2 rating on $35 million of senior lien sewer revenue debt and the Baa3 rating on $1.1 billion of second lien sewer revenue debt.

These actions reflect the close financial, political and governance relationship the city shares with the Chicago Board of Education, Moody’s said.

Moody's previously placed the B3 GO for the Chicago Board of Education under review for possible downgrade.

Continued uncertainty surrounding the school district's financial situation in the wake of the state's own budgetary pressures and an indicated commitment from the city's administration to staving off further deterioration in the district's finances suggest the possibility of more direct intervention by the city in the district's fiscal affairs, the agency said.

The rating review will consider appropriation actions the state takes that may or may not address the school district's short-term liquidity needs and long-term budgetary hurdles, Moody’s said.

On Wednesday, the state of Illinois' GO and related ratings were placed under review for possible downgrade.

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