The city’s retirement fund deficit is weighing on banks.

The city of Chicago is facing a big problem as it may be forced to pay banks around $2.2 billion after the investors service of Moody’s dropped its credit rating to junk, deepening the crisis even further in the third largest city of the United States. The decision of the company made on Tuesday to cut the general obligations of Chicago which are around $8.1 billion now allows the banks to ask that the city repays its debt early, and exposes it to fees to end swaps contracts, said Moody’s in a statement. Amongst the bankers in the city are Barclays Plc, JPMorgan Chase & Co. and Wells Fargo & Co.

This downgrade will certainly add more financial pressure to the city of Chicago, which is already one of the lowest rated big cities in the United States alongside Detroit. An Illinois Supreme Court ruling during last week has been made in order to safeguard retirement benefits, and this has cast many doubts on Chicago’s ability to pay up its $20 billion pension fund shortfall. “It certainly becomes a wakeup call for action for the political leaders, and also other parties, to come to the table and find a solution,” stated Dan Heckman, who is a senior fixed income strategist at United States Bank Wealth Management, which covers around $128 billion in Kansas City, Missouri. The problem with Chicago’s retirement fund is a constant growing burden on the city after the city’s inability to cover all the benefits it has promised.

The annual payment for worker’s benefits is expected to rise by around $600 million during next year. The city of Chicago was already in a hurry to refinance $900 million of floating rate debt in order to reduce the potential penalties which it now faces because of Moody’s downgrade. The city is planning to go through with the sales arranged for next week, said city officials who were not authorized to discuss any details. According to data from Bloomberg it is expected that around $383 million worth of bonds will be sold off.

In a statement from Moody’s they said that the options of the city have narrowed drastically because of the ruling that has been made. “The Supreme Court ruling in our view raises the risk that Chicago’s pension reform won’t work,” stated Matthew Butler, who is an analyst at Moody’s.