Postponed Illinois Bond Deal Still Weeks Away, Sinsheimer Says

Illinois plans to sell a postponed $500 million general-obligation issue after Governor Pat Quinn releases his fiscal 2014 budget proposal next week.

Illinois may bring back the bond sale, which will price through competitive bid, as soon as late March to raise cash for construction, John Sinsheimer, the state’s director of capital markets, said in a telephone interview. Quinn, a Democrat, is set to deliver his budget address March 6.

“No date has been set at this point, but we do want to come back to market as quickly as we can after the budget speech,” Sinsheimer said of the planned sale.

The state Jan. 30 pushed off the deal after Standard & Poor’s cut Illinois’s rating to A-, its seventh-highest grade, and threatened to lower the mark further. The company cited the state’s $9 billion of unpaid bills and lawmakers’ “poor track record” on repairing a pension deficit. S&P rates Illinois the lowest among U.S. states.

Illinois’s retirement system is the worst-funded in the U.S. It has 39 percent of assets needed to meet projected obligations for five major groups of public employees, according to the Civic Federation, a Chicago-based nonprofit research group.

Illinois general-obligation bonds maturing in August 2019 traded Feb. 22 with an average yield of 2.52 percent, or 1.38 percentage points above benchmark municipals, data compiled by Bloomberg show. That yield difference was 1.28 percentage points Jan. 24, one day before the S&P rating cut.

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