Unless used for capital improvements, any new Illinois State borrowing, regardless of security structure, will amount to nothing more than kicking the can further down the road. Markets remain open to uncreditworthy government borrows longer than they should. In a low interest rate environment, investors will stretch credit standards. Benchmark bond ratings are at variance with the rating agencies. ***
Everyone knows Illinois’ financial condition is poor. Conventional thinking seems to be that a bond default, should that happen, would be many years in the future. Pardon me, but wasn’t that the thinking right up to Puerto Rico’s, ‘We can’t pay’ announcement?
To answer the question of just how badly off is Illinois, I assembled a list of key creditworthiness indicators and applied them to New York, a highly rated state, and Illinois.
This post was published at Zero Hedge on Oct 18, 2017.