Illinois Morass Fuels Speculation It'll Be First Junk-Bond State
Both Moody’s and S&P have warned of further credit deterioration if Illinois enters a third year without a spending plan. Both companies rank Illinois only two steps above junk with negative outlooks, signaling the rating could fall again. No U.S. state general-obligation bonds have ever been rated below investment-grade, according to data going back to at least 1970.
Investors have to be prepared for the possibility, said Matt Fabian, a partner with Municipal Market Analytics Inc.
Illinois is “being managed as if it were a speculative credit,” Fabian said. “It’s hard to get on board and say that Illinois is a buy for anyone besides speculative investors.”Read More