Illinois Trading Near Junk Means Buy on Pension Fix: Muni Credit
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Illinois municipal bonds are set to rally from near-junk yield levels after lawmakers passed measures to help fix the worst-funded U.S. state pensions.
As investors anticipated a deal, the extra yield they demanded to own Illinois general obligations due in 10 years instead of AAA munis fell to 1.7 percentage points Nov. 29, the lowest since August, data compiled by Bloomberg show. The gap is still wider than on revenue bonds with a BBB rank, two steps below the state and two levels above speculative grade.