Illinois Has the Nation's Highest Borrowing Cost by Far

Mish

Illinois bonds have yields over 5 times AAA rated states, and over double Connecticut, the next worst state.

Wirepoints reports Illinois Debt Trading at Junk Levels.

A new borrowing by Illinois shows lenders are already treating the state like it’s junk-rated.

Last week, Illinois raised $800 million from the bond market with repayment dates through 2045. The borrowed money, meant for summer construction projects and a pension buyout program, costs Illinois as much as 5.85 percent yearly. No other state in the country pays such high interest rates.

Over the life of the $800 million bond issue, Illinois will end up paying $450 million more in interest costs than if it were a AAA-rated state. 

Illinois Borrowing Penalty

Illinois Borrowing Penalty

Illinois’ True Retirement Cost is 58% of the Budget

On May 4, I noted Illinois’ True Retirement Cost is 58% of the Budget

Illinois has the worst funded pension plans in the nation. That was true before Covid-19 as well.

New Jersey, Hawaii, Connecticut, and Kentucky are next in line. But no other state comes close to having that much of their budgets swallowed by retirement costs.

On April 17, I commented Illinois is Insolvent: State Requests a Pension Bailout From Congress

No Bailout

Illinois does not deserve a bailout. Its pension woes are of it own making and have nothing to do with the coronavirus.

Illinois debt trades like junk, because it is junk.

Mish

Comments (36)
No. 1-11
Realist
Realist

Time to move to Australia or New Zealand Mish. Both countries have controlled CV19 really well and have low debt to gdp compared to the US.

Realist
Realist

Maybe Trump can sell Illinois to Greenland. Problem solved.

TimeToTest
TimeToTest

Bailout coming soon. There is just no other way.

At this point tomorrow is the only day that matters. Party on.

gregggg
gregggg

At this point it's all just Illi-noise.

anoop
anoop

Is this an opportunity to front run the fed?

FromBrussels
FromBrussels

I don t think the FED will allow Illi to default ....I am inclined to buy some Illi debt....We DO live in lalaland after all, don t we ?

mkestrel
mkestrel

Its rather annoying that anyone will still loan them money

Tony Bennett
Tony Bennett

"No Bailout"

...

Camel's nose

Looking forward to the day a line is drawn ... somewhere ... anywhere.

channelstuffing
channelstuffing

Why pick on Illinois,every state and DC is bankrupt and completely insolvent,the federal govt is quietly borrowing a trillion dollars "officially"probably double (triple)that every single MONTH! Most of that massive pile of freshly printed cash is goin to bail out the bankrupt states! After a dozen years of "the longest expansion in US history" (LMMFAO),record low unemplyment ...."rate",12 years of positive GDP..."rate".....virtually everything (literally) is insolvent/bankrupt/needs bailout or has collapsed/closed!

Webej
Webej

The most important economic law, applicable here, is: What cannot be paid, will not be paid.
It's just a matter of how much time until people reconcile with reality.


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