Chicago’s public schools delayed an $875 million bond sale after a clash between the state’s top Republicans and the city’s Democratic mayor escalated, adding to the pressure on the nation’s third-largest district as it struggles to avert insolvency, Bloomberg News reported yesterday. The Chicago Board of Education postponed the deal yesterday after offering yields of as much as 7.75 percent, about 5 percentage points more than top-rated tax-exempt bonds. The planned debt issuance came a week after Republican Governor Bruce Rauner called for the state to take over the district and potentially authorize bankruptcy. That idea was immediately rejected by Democrats in control of the legislature and Chicago Mayor Rahm Emanuel, who have unsuccessfully pushed for an influx of state aid. The offering, one of the lowest-rated municipal sales in recent history, would have refinanced debt and allowed the district to put off interest payments. The strain has been building on the school system, with Moody’s Investors Service, Standard & Poor’s and Fitch Ratings cutting their grades on its $6 billion of debt deeper into junk, the teachers union threatening to strike and a deficit that’s projected to reach $1 billion a year through 2020.
