KBRA Releases Report Affirming City of Chicago, IL G.O. Bonds at BBB+, Negative Outlook

On March 2, 2026, KBRA affirmed the long-term rating on the City of Chicago's (the City's) outstanding general obligation (G.O.) bonds at BBB+, with a Negative Outlook.

The City of Chicago’s (“the City’s) deteriorating fund balance, narrowing liquidity, and exceptionally high and rising fixed cost burden led to its Feb 25, 2026 rating downgrade. These pressures limit financial flexibility and may impair the City’s ability to sustain advance pension contributions intended to stabilize the net pension liability.

The Negative Outlook continues to reflect our view, reinforced by recent budget actions and the use of borrowing to fund certain operating costs, that the City’s capacity to address its growing structural deficit through new recurring revenues and meaningful expenditure reforms is increasingly constrained. These limitations are likely to lead to greater reliance on one-time measures, an increased risk of significant mid-year budget adjustments in the current fiscal year, and greater budget deficits in FY 2027 and beyond.

Somewhat offsetting these credit concerns is the resilience of Chicago’s highly diversified tax base, attributable to its prominence as the economic hub of the Midwest. Continued expansion in the health care, technology and advanced-industry sectors is expected to support moderate employment and resource base growth over the near term, barring negative macroeconomic headwinds.

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This Report Press Release was updated on March 23, 2026 to remove reference to the Series 2026C-G Bonds. The sale of the Series 2026C-G Bonds was postponed by the City.