CHICAGO - Already grappling with a spike in interest rates on nearly $1 billion of auction-rate securities in its overall debt holdings, the Chicago Public Schools system last week saw the rate on an insured $65 million variable-rate demand obligation bond jump to a state-imposed maximum of 9% at remarketing.

The district saw the steep increase in the rate on a tranche of bonds that carry insurance from triple-A rated CIFG Assurance NA,schools treasurer David Bryant said Friday. The insurer's credit is under review by Moody's Investors Service for a possible downgrade, is on negative watch from Fitch Ratings, and carries a negative outlook from Standard & Poor's.

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