Democrats barankrupting the Chicago Public Schools System - Forrest Claypool borrows 3/4 of a BILLION DOLLARS at 7.75% even though the curtrent interest rate is less than 1%

CORRUPTION - THE CHICAGO WAY

After putting a long-expected bond sale on hold last week, Chicago Public Schools managed to borrow $725 million Wednesday by promising investors extraordinarily high interest rates.

Bonds issued by taxing bodies like CPS are normally considered sound investments, but that's not the case with a school district weighed down by debt, labor uncertainty and political tumult, one market analyst said.

"This is not a typical municipal bond," said Matt Fabian, a partner at Concord, Mass.-based Municipal Market Analytics. "You can't go into it assuming that you know what's going to happen or that you will almost surely get your money back. There is a large degree of speculation."

Documents released early Wednesday afternoon show CPS sold 28-year bonds at yields of 8.5 percent. Before the district pulled its bond issue last week, it was offering 25-year bonds at 7.75 percent. By comparison, when the state of Illinois sold bonds earlier this month, yields were 4.27 percent for 25-year bonds

Bond issues are made up of individual bonds that mature at different times. Borrowers pay higher rates on bonds that mature in later years.

The district's bond rating has been dropping for months, with Moody's Investors Service lowering it again last week to four levels below junk status. Historically, 12 percent of municipal borrowers with CPS' current rating from Moody's have defaulted within five years, according to an analysis by the ratings agency.

Outside of Puerto Rico, no U.S. municipality in recent history has sold a bond issue as large as the district did Wednesday with such low marks from the major debt rating agencies, according to an analysis by New York City-based Interactive Data, a firm that evaluates municipal bonds.

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