Illinois sold $875 million in bonds to make accelerated pension benefit payments and finance capital expenditures.
The state sold the bonds in three series. The taxable Series of December 2023A bonds, consisting of $175 million, mature between 2024 and 2028, yielding between 5.31% and 5.84%. The tax-exempt Series of December 2023B bonds, consisting of $350 million, mature between 2029 and 2038, yielding between 3.5% and 4.14%, and the tax-exempt Series of December 2023C bonds, also consisting of $350 million, mature between 2039 and 2048, yielding between 4.22% and 4.7%. The securities received a rating of A- from S&P Global Ratings, A3 from Moody’s Investors Service, and A- from Fitch Ratings. The rating marked an upgrade from Fitch.
The upgrade “reflects the state’s ability to execute on significant planned reserve contributions and maintain improvements in budget management including normalized accounts payable, thereby improving the state’s overall operating profile,” Fitch analysts wrote.
Despite the upgrade from Fitch, which followed upgrades earlier this year by Moody’s and S&P, Illinois’ S&P credit rating is still tied with New Jersey for the lowest-rated state in the country. The state has more than $60 billion in outstanding debt, with a per capita debt burden of $50,000. Watchdog group Faith in Accounting gave the state an “F” for fiscal management in its 2022 annual report card.
The bond proceeds will fund the state’s six-year, $45 billion capital improvement program, known as Rebuild Illinois, which Governor J.B. Pritzker signed into law in 2019.
The bonds are general obligations of the state, backed by its full faith and credit.
J.P. Morgan Securities LLC and BofA Securities, Inc served as lead underwriters on the issuance. Acacia Financial Group, Inc acted as financial advisor.