Posted on 06/22/2010 6:46:33 AM PDT by SeekAndFind
If you go to Sacramento this week, don't be surprised to hear champagne corks popping and chants of "We're #2! We're #2!" The cause for celebration? Illinois has overtaken California as the worst credit risk among American states.
As of Monday, the credit default swap spread for Illinois general obligation bonds climbed to 313 basis points for a five-year contract -- meaning a bondholder must pay over 3% of the bond's face value per year to be insured against default.
That's a higher price than for all but seven sovereign entities tracked by CMA, and slightly higher than California, whose five-year CDS spread sits at 293. Investors rate Illinois's debt as slightly riskier than Iceland's or Latvia's, but not quite as big a gamble as Iraq's.
Despite this environment, Illinois chose to issue an additional $300 million in taxable Build America Bonds last week. Unsurprisingly, the markets were not keen and demanded a high price: the new 25-year bonds were sold with a yield of 7.1%, a spread of 297 basis points over 30-year treasuries. Illinois' last long term issues, in April, had spreads of 205 and 210 basis points, meaning investors were already nervous about Illinois and are growing moreso.
This issuance provides further evidence that the ratings agencies haven't fully appreciated the dire nature of state finances, at least in states like California and Illinois. While Illinois carries a Moody's rating of A1, four notches above junk status, the markets put Illinois's debt close to the borderline between junk and investment grade.
(Excerpt) Read more at realclearmarkets.com ...
NO, we are the NEXT MEXIFORNIA!! Our Governor and Mayor Daley LOVES anything illegal, especially Illegal aliens!!
Mayor Daley Proclaims 2010 The Year Of Mexico In Chicago
“While Illinois carries a Moody’s rating of A1,..”
And they will until 1 day after they default. :)
Blue states sinking. I have even read somewhere that Cali has the worst eductated populace in the country beating out that ol’ stalwart of illiteracy MS.
India
This is what happens when one party controls major cities and the entire state for YEARS and DECADES. They voted for Blago TWICE and Daley whenever they have the change.
And they make fun of and mock republicans, even Reagan.
I just can’t imagine anyone dumb enough to loan California, IL, MI or NY money.
No, Illinois is the new Greece.
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