That headline is not exactly correct, but it is close. Here is something that Pat Quinn did not mention in his State of the State address: On January 30 Illinois was planning to sell $500 million of general obligation bonds. But at the last minute, Illinois officials postponed the sale of the bonds because the interest rate was going to be too high.
This is from a report by Reuters:
“‘We were getting indications of higher spreads than we were anticipating,’ said [John] Sinsheimer [, Illinois’ capital markets director], who declined to discuss specific spread levels. ‘We felt it was prudent to pull the deal for the time being.’
Illinois is already faced with the highest spreads – 137 basis points in the latest week – over Municipal Market Data's benchmark triple-A scale among states and cities tracked by MMD ….
The nation's fifth most populous state faces an array of financial problems including the most underfunded state pension system in the nation and a backlog of billions of dollars in unpaid bills. …
On Friday, Standard & Poor's Ratings Services cut Illinois to A-minus with a negative outlook, while Fitch Ratings earlier this month warned it could downgrade the state's A rating within the next six months. In December, Moody's Investors Service revised the outlook on the state's A2 rating to negative.
Illinois' ratings with S&P and Moody's are at the lowest level among states they rate. …
Tim McGregor, director of municipal fixed income at Northern Trust, said the state probably would have had little difficulty selling the bonds on Wednesday ‘with a little bit of yield’ …. He added that if Illinois wants to attract lower rates in the market, it needs to fix its finances, particularly pensions.
‘Spreads won't tighten just because they want them to tighten,’ he said, adding the state needs to impress the market by tackling pension reforms.”
When are Pat Quinn and Michael Madigan and John Cullerton going to do something about Illinois’ financial condition? Because it’s not just irresponsible pension promises and underfunding. We don’t pay our bills, either.
Illinois Democrats have controlled both houses of the General Assembly since January of 2003. They now have veto-proof majorities in both houses of the General Assembly. And they have the governor. They need to fix the pension system and they need to play our bills. It’s what governing is supposed to be about.
Comments