Friday, June 2, 2017

Rating Agencies Cut Illnois To Near Junk

Illinois, as well as many other states, has been plagued by massive budget deficits for many years. Rating agencies are finally saying enough is enough in 2017. S&P and Moody's downgraded Illinois to near junk status, the lowest rating ever given to a U.S. state.

As Senate President John Cullerton told reporters in Springfield on Wednesday, "We're going to feel some pain now."

Not yet, but it's coming soon. A downgrade to junk status would prevent many mutual funds from buying Illinois. The real pain comes when nobody shows up to buy its debt.

Headline: S&P, Moody's Downgrade Illinois to Near Junk, Lowest Ever for a U.S. State

Illinois had its bond rating downgraded to one step above junk by Moody’s Investors Service and S&P Global Ratings, the lowest ranking on record for a U.S. state, as the long-running political stalemate over the budget shows no signs of ending.

S&P warned that Illinois will likely lose its investment-grade status, an unprecedented step for a state, around July 1 if leaders haven’t agreed on a budget that chips away at the government’s chronic deficits. Moody’s followed S&P’s downgrade Thursday, citing Illinois’s underfunded pensions and the record backlog of bills that are equivalent to about 40 percent of its operating budget.



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