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Illinois to soon return to the bond market
CHICAGO, March 11 |
CHICAGO, March 11 (Reuters) - Illinois, which postponed a $500 million bond sale in January, is planning to announce a new bonds sale as soon as this week, a state official said on Monday.
The preliminary official statement for the deal will be published this week for a sale at the beginning of April, said a state official who asked not to be identified.
At the end of February John Sinsheimer, the state's capital markets director, had said Illinois was planning to go ahead as soon as late March, after the presentation of the new budget, with a competitive sale of the general obligation bonds.
Governor Pat Quinn presented the new budget plan last week.
Illinois yanked the deal that was scheduled for competitive bidding on Jan. 30 because of credit concerns that threatened to boost the state's borrowing costs.
Just days before the sale date, Standard & Poor's Ratings Services cut Illinois' rating to A-minus with a negative outlook, the lowest level among states it rates. The credit downgrade could lead to investors demanding higher interest rates on Illinois bonds, costing the state government more money in debt service payments.
Investors' concerns over credit quality have driven up the amounts the state must pay to borrow. On Friday the spread of yields on Illinois debt to Municipal Market Data's benchmark scale was 140 basis points for a 10-year bond. For the last year, the spread has averaged 149.8 basis points, the second highest after financially-troubled Puerto Rico.
On Monday Illinois, which has the worst-funded state pension system in the country, agreed to settle federal civil securities fraud charges alleging it repeatedly misled municipal bond investors about the underfunding of its pensions, the Securities and Exchange Commission said on Monday.
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