Illinois’ credit rating is two downgrades away from “junk” status.
Credit-rating agency Moody’s Investor Services downgraded the value of Illinois’ general obligation bonds June 8 to Baa2 from Baa1, affecting approximately $26 billion of debt. That’s two levels above “junk bond” status.
The agency cited the long-running standoff between Gov. Bruce Rauner and Democrats in the General Assembly and politicians’ failure to pass a budget as the main reasons for the downgrade.
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State Comptroller Leslie Munger said the downgrades show that lawmakers need to get to work on a budget
“Moody’s bond ratings are a reflection of the riskiness of loaning money to the state of Illinois,” Munger said. “It speaks of the incredible need for everyone to focus on what they’re elected to do, which is to work together to put a budget in place and pass it before our fiscal year begins.”
Rauner spokeswoman Catherine Kelly said in a statement, “Every rank-and-file Democrat who blindly followed the Speaker down this path is directly responsible for the downgrade.”
State Treasurer Michael Frerichs said in a statement that he continues to urge Rauner and the General Assembly to put their differences aside and get a budget in place before more people are hurt.
Moody’s added that Illinois’ outlook is still negative, meaning more downgrades could be coming. Rauner’s office announced that the state plans to sell $550 million in bonds next week. The downgrade will likely affect how high of an interest rate Illinoisans will have to pay on that and future borrowing.
The state would also incur $155 million in bank fees stemming from a 2003 variable-rate bond purchase should it be downgraded again.