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Wirepoints reports Illinois Debt Trading at Junk Levels.

A new borrowing by Illinois shows lenders are already treating the state like it’s junk-rated.

Last week, Illinois raised $800 million from the bond market with repayment dates through 2045. The borrowed money, meant for summer construction projects and a pension buyout program, costs Illinois as much as 5.85 percent yearly. No other state in the country pays such high interest rates.

Over the life of the $800 million bond issue, Illinois will end up paying $450 million more in interest costs than if it were a AAA-rated state. 

Illinois Borrowing Penalty

Illinois Borrowing Penalty

Illinois’ True Retirement Cost is 58% of the Budget

On May 4, I noted Illinois’ True Retirement Cost is 58% of the Budget

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Illinois has the worst funded pension plans in the nation. That was true before Covid-19 as well.

New Jersey, Hawaii, Connecticut, and Kentucky are next in line. But no other state comes close to having that much of their budgets swallowed by retirement costs.

On April 17, I commented Illinois is Insolvent: State Requests a Pension Bailout From Congress

No Bailout

Illinois does not deserve a bailout. Its pension woes are of it own making and have nothing to do with the coronavirus.

Illinois debt trades like junk, because it is junk.

Mish