CHICAGO - Chicago will host its annual investors' conference on Aug. 8 to update market participants on the city's credit, including what officials describe as progress made over the last year on the pension front and ongoing strains.
"The investors' conference is intended to provide investors to the city of Chicago and Chicago Public Schools an update on key issues affecting our credit" and to provide a "closeup look at Chicago's economy and finances," the invitation reads.
A reception is scheduled for Aug. 7 at the Gleacher Center and the conference follows the next day at Chicago's downtown Cultural Center. The conference is hosted by the city and Mayor Rahm Emanuel and the school system.
Tours of Chicago Transit Authority facilities, the city's water treatment facility, O'Hare International Airport, Millennium Park are available. Investors are admitted free, while other participants pay $100.
The Friday agenda includes discussions on the city and schools' fiscal position and an update on key city initiatives, pensions and the Chicago economy, and politics and the economy. In a departure from past conferences hosted by Emanuel and his chief financial officer Lois Scott since Emanuel took office in 2011, the agenda does not appear to include presentations by other city related agencies like the Chicago Transit Authority, City Colleges Chicago, and the park district.
The ratings of both the city and school system have weakened over the last two years. Moody's Investors Service rates Chicago Board of Education's $6.3 billion of debt Baa1, with a negative outlook, after two downgrades over the past year. Its strains include rising pension costs and a reliance on one-shots to balance its budget that has led to a nearly $1 billion deficit.
Standard & Poor's rates the school board A-plus and stable. Fitch Ratings downgraded the board in September, lowering it to A-minus with a negative outlook. A downgrade below the mid-triple-B level by any two rating agencies would trigger swap terminations.
Chicago suffered two, triple-notch downgrades since last summer, one from Moody's and the other from Fitch. Moody's stung the city anew earlier this year when it dropped the GO rating one more level to Baa1 citing the city's pension funding strains.
Fitch Ratings rates Chicago's $8 billion of GOs A-minus and Standard & Poor's rates them A-plus. All three assign a negative outlook. The city won state legislative approval for a pension overhaul for two of its four funds that account for half of its $19.5 billion of unfunded liabilities, but a $600 million spike in funding for the other two looms next year.
A further downgrade from Moody's could trigger termination events on some of the city's swaps and letters of credit, Moody's wrote in its last report. "The city's existing liquidity is more than sufficient to cover current mark-to-market valuations on the swaps associated with the city's GO debt," Moody's wrote in its March report when the negative valuation on all 19 of the city's GO swaps totaled about $170 million.