Illinois Bonds Fall as Budget Impasse Pushes Rating Toward Junk
- With politicans at odds, cut below investment grade is likely
- Illinois would be the first U.S. state ever cut to junk
The Illinois State Capitol building in Springfield, Illinois, on Feb. 9, 2007.
Photographer: Mark Wilson/Getty ImagesIllinois bond prices have dropped as Governor Bruce Rauner and lawmakers remain locked in two-year stalemate over the government’s budget, increasing the chance that it may become the first U.S. state ever cut to junk.
Illinois’s 10-year bond yields, which move in the opposite direction as price, have soared to about 5.2 percent, or 3.36 percentage points more than top-rated municipal debt, according to Bloomberg’s indexes. Securities due in 2023, the most actively traded Friday, sold for an average yield of 4.3 percent, a nearly half percentage point jump since May 31, the day before S&P Global Ratings and Moody’s Investors Service downgraded Illinois to the lowest investment grade.