S&P Global Ratings lowered its rating to 'BBB' from 'BBB+' on the city of Chicago's outstanding general obligation (GO) debt and removed the rating from CreditWatch, where it was placed on Nov. 19, 2024. The outlook is stable. The downgrade reflects our view that the 2025 budget leaves intact a sizable structural budgetary imbalance that we expect will make balancing the budget in 2026 and outyears more challenging. The rating action also reflects our view that following the 2025 budget negotiations, the city's practical options for raising new revenue appear less certain, as does the willingness of city leadership to cut spending, creating a level of uncertainty around its financial trajectory that is more appropriately reflected in the lower rating.
