Life in "Progress" State - Illinois edition
Standard & Poor's Ratings Services on Wednesday downgraded
Illinois' credit rating by one notch to A from A-plus, citing the
state's large budget imbalance and an $83 billion unfunded pension
liability.
The action affecting the state's general obligation bonds comes less
than two weeks after a special Illinois legislative session on pension
reform ended without a solution to rein in costs for the state's five
pension funds.
"The downgrade reflects the state's weak pension funding levels and
lack of action on reform measures intended to improve funding levels and
diminish cost pressures associated with annual contributions," said
S&P analyst Robin Prunty in a statement.
Investors in the $3.7 trillion U.S. municipal bond market have been
demanding higher yields for Illinois debt as the state's fiscal problems
fester. Many states are struggling with budgetary constraints and
pension liabilities, but the fiscal problems in Illinois predate the
2007-2009 recession and have continued to worsen.
It also keeps Illinois as the second lowest-rated U.S. state after California, which is rated A-minus by S&P.
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