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Worst Losers Turn Winners in Illinois Repayment Bet: Muni Credit

Illinois’s deteriorating finances are tainting debt from issuers across the fifth-biggest U.S. state, drawing investors to the extra yield on top-rated Chicago revenue bonds and borrowings of local school districts.

As municipal interest rates fell toward generational lows in the past year, Schroder Investment Management North America bought sales-tax bonds sold by Illinois, Chicago and the agency running the biggest U.S. convention center. All have AAA ratings from Standard & Poor’s and yields twice as high as benchmark munis, data compiled by Bloomberg show.