Adding yet another blow to the moribund finances of Illinois, two major credit rating bureaus, Moody’s and Standard and Poor’s, last week gave the midwestern state another financial downturn; this time to just two levels above junk status, in view of the continued lack of a budget and the growing gulf between Republican Gov. Bruce Rauner and the Democratic majority legislature, said bureau officials.
Citing political gridlock as the reason the change, from from level to Baa2, this action also affects the bond issuance of $2.75 billion in revenue bonds and helps to increase a bill backlog of over $10 billion, according to the Chicago Sun TImes.” It also noted that prior to the Rauner administration, Illinois had the worst credit rating of any state, a fact that may have become lost in the recent donnybrook between the governor and the state legislature.
The change from Moody’s was from a “lowered Illinois’ rating on $26 billion in debt by one level to Baa2. That downgrade affects $2.75 billion in revenue bonds,” and for S&P it “downgraded the state’s general obligation bonds to BBB+ from A-.”
On Monday, the Illinois House Revenue and Finance Committee held a second hearing to address the expenses on interest rate swap deals that have already cost the state of Illinois $684 million, and are tied to financial deals that could cost taxpayers an additional $870 million in November, if the state does not sue or renegotiate these deals as others across the country have done.