Article

2017-06-02 Government

S&P, Moody's Downgrade Illinois to Near Junk

[BLOOMBERG] Illinois had its bond rating downgraded to one step above junk by Moody’s Investors Service and S&P Global Ratings, the lowest ranking on record for a U.S. state, as the long-running political stalemate over the budget shows no signs of ending.

S&P warned that Illinois will likely lose its investment-grade status, an unprecedented step for a state, around July 1 if leaders haven’t agreed on a budget that chips away at the government’s chronic deficits. Moody’s followed S&P’s downgrade Thursday, citing Illinois’s underfunded pensions and the record backlog of bills that are equivalent to about 40 percent of its operating budget.

"Legislative gridlock has sidetracked efforts not only to address pension needs but also to achieve fiscal balance," Ted Hampton, Moody’s analyst, said in a statement. "During the past year of fruitless negotiations and partisan wrangling, fundamental credit challenges have intensified enough to warrant a downgrade, regardless of whether a fiscal compromise is reached."

Illinois hasn’t had a full year budget in place for the past two years amid a clash between the Democrat-run legislature and Republican Governor Bruce Rauner. That’s left the fifth most-populous state with a record $14.5 billion of unpaid bills, ravaged entities like universities and social service providers that rely on state aid and undermined Illinois’s standing in the bond market, where investors have demanded higher premiums for the risk of owning its debt. Moody’s called Illinois "an outlier among states" after suffering eight downgrades in as many years.

"The rating actions largely reflect the severe deterioration of Illinois’ fiscal condition, a byproduct of its stalemated budget negotiations," S&P analyst Gabriel Petek said in a statement. "The unrelenting political brinkmanship now poses a threat to the timely payment of the state’s core priority payments."

Illinois’s 10-year bonds yield 4.4 percent, 2.5 percentage points more than those on top-rated debt. That spread -- a measure of the perceived risk -- is the highest since at least January 2013 and more than any of the other 19 states tracked by Bloomberg.

Posted by Fred 2017-06-02 00:00|| || Front Page|| [11136 views ] Top

#1 I think it is time for Indiana, Missouri and Indiana to form a coalition and liberate Chicago.

Posted by Voldemort Hupomomble1468 2017-06-02 00:35|| 2017-06-02 00:35|| Front Page Top

#2 Why the heck would they want it?

Posted by CrazyFool 2017-06-02 00:41|| 2017-06-02 00:41|| Front Page Top

#3 To contain the spread of Illinois refugees. Illinois can be considered a territory of Indiana, Iowa (third state I meant to mention above) and Missouri, much like Puerto Rico, until they achieve AAA rating under the guidance of mentally competent leadership.

Posted by Voldemort Hupomomble1468 2017-06-02 00:55|| 2017-06-02 00:55|| Front Page Top

#4 A day of financial reckoning may soon be coming for Illinois and California. When that day comes, I hope the do nothing Congress has enough courage to tell them to go to hell.

Posted by Besoeker 2017-06-02 02:24|| 2017-06-02 02:24|| Front Page Top

#5 The time that Keynes predicted - "In the end, we are all dead anyways" - has arrived.

The rank and file are shocked that this thing they were told was sustainable forever is blowing up in their faces. The smarter individuals among Democrats and the rest of the left, the public thugocracy and the politicians and the professoriate and the Davoisie, have ALWAYS known that the Keynesian project would ultimately go bust, they just hoped it would be after they had lived a long and comfortable life. The ones living now have the misfortune of being still alive when the endpoint of stealing from the productive and from their progeny's future has occurred.

It was a gamble on their part. They've crapped out.

Posted by no mo uro 2017-06-02 05:34|| 2017-06-02 05:34|| Front Page Top

#6 The result of decades of political corruption in Chicago. The "One" transferred the new and enhanced model to Washington. Now we know what "O" meant when he said amongst the faux Greek columns: “We are five days away from fundamentally transforming the United States of America” after the election in 2008.

Posted by JohnQC 2017-06-02 08:50|| 2017-06-02 08:50|| Front Page Top

#7 A lot of corporations quit doing work directly for the State of Illinois some time ago.

Seems they weren't getting paid or something.

Posted by Mullah Richard 2017-06-02 09:52|| 2017-06-02 09:52|| Front Page Top

#8 Meanwhile unfunded public pensions, a widespread state and city problem all over the USA, continues to get minimal MSM attention.

Posted by Anguper Hupomosing9418 2017-06-02 13:21|| 2017-06-02 13:21|| Front Page Top

#9 Happier every day that we left Illinois in 2000.

Posted by Tom 2017-06-02 14:24|| 2017-06-02 14:24|| Front Page Top

#10 "Escape from Illinois?" A new movie?

Posted by JohnQC 2017-06-02 18:18|| 2017-06-02 18:18|| Front Page Top

#11 Number #1 to blame: Michael Madigan

Posted by 3dc 2017-06-02 19:34|| 2017-06-02 19:34|| Front Page Top

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