The Necropolitan Sentinel

After yet another downgrade, Illinois decided to hold back on issuing more bonds:

CHICAGO, Jan 30 (Reuters) – Illinois yanked a $500 million general obligation bond issue slated for Wednesday because of credit concerns that could boost its borrowing costs, in the latest financial blow to the state, which has failed to fix its bloated public pensions.

Investment banks that planned to bid on the debt indicated investors would demand higher yields on the 25-year bonds, said John Sinsheimer, Illinois' capital markets director.

"We were getting indications of higher spreads than we were anticipating," said Sinsheimer, who declined to discuss specific spread levels. "We felt it was prudent to pull the deal for the time being."

…ok. Curious why it took this long to pull the trigger on holding back with bond issues, given this is what the state's credit spread has looked like since Quinn became governor:

=squint=

Did they hold back on issuing bonds in 2010?

Nope. (The bit below is from July 2010)

 

More than $2 billion in orders came in Wednesday for Illinois' $900 million taxable Build America bond issue, a show of strong demand, said John Sinsheimer, the state's director of capital markets.

The 25-year bonds that make up more than half the issue will yield 7.34 percent annually. The average yield for all the bonds in the package is 6.96 percent, Sinsheimer said.

….

 

The federal government rebates 35 percent of interest costs on Build America bonds. That rebate will bring Illinois' interest cost on the $900 million issue to 4.56 percent, Sinsheimer said.

 

Note the bolded. I guess because the Obama money was coming in, it was time to charge the card to the limit, eh? High interest spread be damned.

But what happened in November 2010? Oh right. Half of Congress flipped back to the Repubs. No more money gusher, except through Fed policy, and that goes only so far.

Tweet