Illinois sets $350 mln bond sale after pension reform vote
CHICAGO Dec 2 (Reuters) - Illinois will sell $350 million of bonds on Dec. 12, just over a week after the state legislature is expected to vote on a bill to rein in the state's huge public pension costs, the state announced on Monday.
The general obligation bonds with an ultimate maturity in 25 years will be sold competitively in the $3.7 trillion U.S. municipal market, according to John Sinsheimer, Illinois' capital markets director.
The sale comes as state lawmakers are scheduled to return to session on Tuesday to vote on legislation to ease a $100 billion unfunded pension liability. The plan put forward last week by legislative leaders would raise the retirement age for certain workers, suspend and adjust cost-of-living increases for retirement pay and cap salaries used to calculate pension benefits and other measures.
The bonds in Illinois' upcoming sale will be taxable as some of the proceeds will be used to reimburse school districts for projects they paid for in previous years, as well as for other projects that cannot be financed with tax-exempt debt, according to Sinsheimer.
Continued inaction on pension reform has hammered Illinois' credit ratings to the lowest levels among U.S. states, and investors in the U.S. municipal bond market are demanding higher yields for Illinois debt.
Illinois is already paying the second-biggest credit penalty, behind Puerto Rico, among large muni debt issuers tracked by Municipal Market Data, a unit of Thomson Reuters. The state's so-called credit spread stood at 173 basis points over MMD's benchmark triple-A yield scale in the latest week. By contrast, California's credit spread is only 51 basis points, while New York City's is 49 basis points.
The preliminary official statement for the bond sale will be out on Tuesday. Sinsheimer said a supplemental advisory will be posted if any legislative action takes place on pensions.
Illinois sold $3 billion of bonds as of the end of September, making it the fourth-biggest muni debt issuer so far in 2013, according to Thomson Reuters data.
- Exclusive: Radar data suggests missing Malaysia plane deliberately flown way off course - sources
- Lost Malaysian airliner may have run out of fuel over Indian Ocean : source |
- UPDATE 2-Satellite data shows missing Malaysia plane may have flown thousands of miles-source
- Investigators focus on foul play behind missing Malaysia plane: sources |
- UPDATE 1-Rolls-Royce concurs with Malaysia on missing jet's engine data