S&P rates Illinois' $1.3 bln bond sale A- with negative outlook

CHICAGO, June 24 Mon Jun 24, 2013 12:22pm EDT

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CHICAGO, June 24 (Reuters) - Standard & Poor's Ratings Services on Monday assigned an A-minus rating and negative outlook to Illinois's sale of $1.3 billion of general obligation bonds scheduled to price on Wednesday.

The rating agency, which downgraded the state to A-minus in January, reiterated its warning that the rating, already the lowest among U.S. states, could fall to the triple-B category if a fix to Illinois' nearly $100 billion unfunded public pension liability remains elusive. It also said the state must deal with the scheduled partial expiration of big income tax rate hikes on Jan. 1, 2015.

Increased revenue from the tax hikes has largely been used to make the state's annual pension payments.

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