Illinois Approves Funds for Met Pier Debt Stung by DowngradeElizabeth Campbell
Illinois lawmakers approved a measure that allows Chicago’s Metropolitan Pier and Exposition Authority to make a payment into its debt-service fund that it was forced to skip last month because of the state’s budget impasse.
The agency’s debt rose after the Senate voted unanimously late Wednesday to give it authority to transfer tax money into the account that pays bondholders. The measure, which passed the House, also releases about $5 billion of federal funds for social-service programs. Governor Bruce Rauner, a Republican, signed the bill Thursday.
The agency, which runs the largest U.S. convention center, was ensnared by a political fight over the budget because it needed the legislature’s approval to touch tax money that was collected on its behalf. When it failed to make a required $20.8 million deposit in July, Standard & Poor’s cut the agency’s top credit rating by seven levels.
The price of Met Pier bonds, which tumbled after the rating cut, rose early Thursday. A portion of the authority’s $255 million of bonds maturing in 2050 traded at an average of 100 cents on the dollar to yield 4.9 percent. That’s up from an average of 99.4 cents on Wednesday.
The authority’s debt will rebound if the bill becomes law, according to Barclays Plc. The 2050 bonds traded for as much as $1.04 on Aug. 4, the day before the S&P downgrade.
“If this measure is passed and signed by the governor, I would expect to see outperformance between now and the end of the year compared to the rest of Illinois paper and BBB’s,” Mikhail Foux, municipal debt strategist at Barclays in New York, said in an interview before the vote. “Prices would improve, not necessarily immediately, but over the course of the next several months.”
The authority, whose board of directors is appointed by the governor and Chicago’s mayor, owns McCormick Place, the Chicago convention center. It also runs Navy Pier, an entertainment complex with shops, restaurants and parks on Lake Michigan.
The authority hasn’t missed any interest or principal payments to investors. The next payment is due in December.