Board of Education of the City of Chicago

S&P raised CPS' junk rating by one notch, saying federal funds will boost an "already positive financial trajectory."

The junk-rated school district won an upgrade and saw its secondary bond market spreads narrow as it expects to pocket about $1.8 billion in new aid.

High-yield continues to be sought after as high-grade paper is yielding about 0.70% in 10 years and 1.40% or lower in 30 years and credit spreads continue to tighten in nearly every sector. Ratios are near 20-year record lows.

The junk-rated district that is managing the COVID-19 pandemic's fiscal impact with the help of federal relief trimmed spread penalties as investors were drawn to the extra yield offered for the junk paper.

Chicago Board of Education bonds were repriced to lower yields by as much as 37 basis points, showing just how far investors will go for any incremental yield.

Federal COVID-19 relief aid cushions the district's balance sheet but labor, state budget, and pension woes remain.

Returns of all the investment grade options "pale in comparison to those for municipal high-yield," which should bolster Texas gas and Chicago public schools deals.

Chicago Public Schools will get more than it budgeted for from the federal emergency relief bill; the Illinois Regional Transportation Authority got a bit less.

The Chicago Board of Education warns of tough spending decisions ahead if the federal government doesn't act on a new stimulus/relief package.

The coronavirus adds to the fiscal challenges facing the already junk-rated school district, which is the nation's third-largest.