Illinois could still become first state to receive a 'junk' credit rating
Illinois could still become the first state in history to receive a "junk" credit rating even with the House and Senate overriding Gov. Bruce Rauner's veto of a budget plan, Capitol Fax reported.
"Moody’s has placed the State of Illinois’ Baa3 rating on review for possible downgrade," Capitol Fax quoted Moody's Investor Service as announcing. "The review incorporates our expectation that the Illinois House of Representatives will override Gov. Rauner’s veto and implement revenue increases as part of the budget proposal."
Joe Mielenhausen, a Moody's spokesman, told CapitolFax.com that it might be too late for Illinois.
“We are anticipating that the House will override the veto and the budget plan will be implemented, but essentially we’re now reviewing how the budget implementation will impact the state’s two most pressing credit challenges — pension liabilities and the backlog of unpaid bills — and whether this mitigation will be enough to avoid another downgrade,” Mielenhausen said.
Illinois has pension liabilities of approximately $251 billion and an unpaid bill backlog of nearly $15 billion.
The state's current credit rating of Baa3 means its obligations are “medium-grade and subject to moderate credit risk and as such may possess certain speculative characteristics.”