Illinois Issues $750 Million of Bonds in Third Sale of 2014

Illinois, the lowest-rated U.S. state, issued $750 million of tax-exempt bonds in its third general-obligation sale of 2014.

The deal includes a portion maturing in May 2024 that priced to yield 3.38 percent, according to data compiled by Bloomberg. The yield is 1.01 percentage points above benchmark municipal bonds.

Today’s sale had wider spreads than those the state earned on a competitive offering two weeks ago, when its 0.93 percentage point spread for 10-year debt was the lowest since 2009. Today’s gap is still narrower than Illinois’s last negotiated sale in February, when it issued about $1 billion at an interest rate 1.11 percentage points above 10-year benchmark debt.

Proceeds will fund Illinois Jobs Now!, a $31 billion initiative started in 2009 to generate 439,000 jobs and improve roads, bridges and schools. The state has offered debt four times since lawmakers in December passed measures addressing the worst-funded state pension system. The steps are designed to save $145 billion over 30 years.

Yields on the state’s 10-year securities increased 0.05 percentage point from preliminary pricing, though they dropped 0.1 percentage point on the longest maturity, due in May 2039.

Illinois’s credit is ranked at the seventh level of investment grade from the three biggest rating companies.

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