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  #51  
Old 07-19-2012, 10:58 AM
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http://www.chicagobusiness.com/artic...illion-in-debt

Quote:
Despite its shaky finances and generally low credit rating, Illinois easily sold nearly $1.5 billion in specially structured bonds Wednesday at rock-bottom interest rates.
With a dedicated stream of unemployment insurance taxes backing them up, the bonds were highly rated and investors apparently did not demand a significantly better price just because they were coming out of a state with well-known fiscal problems.
“We find no premium in the pricing related to Illinois,” said John Sinsheimer, the state's director of capital markets. Market observers said they could not quibble with that. Some maturities actually sold well below the going interest rate for an index of comparable municipal bonds, due to the high demand.
The bonds sold at an average interest rate of 1.46 percent, assuming they are paid off early as anticipated. That's at least one percentage point less than the state would normally pay on routine borrowings of similar maturities these days.
It's a significant deal, saving Illinois companies about $200 million a year, or $42 per employee next year in unemployment insurance taxes, by allowing the state to pay off more than $1.1 billion borrowed from the federal government during the last recession to pay jobless benefits. (It will owe closer to the $1.5 billion raised by the time the debt is paid off this fall.)


Read more: http://www.chicagobusiness.com/artic...#ixzz21549TWYA
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  #52  
Old 07-19-2012, 11:44 AM
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mpc-if illinois is a mess (and i think concsesnus agrees), why is the investing world so happy to give them the deal at 1% lower than it should? are investors dumb, or is a fed bailout assumed, or they assume a massive reorg of state finances is coming?
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  #53  
Old 07-19-2012, 11:50 AM
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There's this bit:
Quote:
The bonds were rated AA+ by Fitch Ratings and AA by Standard & Poor's Financial Services LLC, with stable outlooks.
....
“This thing is very well-structured,” said Michael Brooks, senior portfolio manager at New York-based Alliance Bernstein LLP, who planned to buy some of the bonds after attending an investor presentation by the state last week. “They emphasized very correctly this is not a state credit.”
So I guess people believe it's "containerized"
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  #54  
Old 07-19-2012, 02:10 PM
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Originally Posted by campbell View Post
There's this bit:
So I guess people believe it's "containerized"
I think P.T. Barnum would be proud.
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  #55  
Old 07-19-2012, 03:12 PM
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There's no way Illinois (or California) is getting bailed out by the feds.

That requires a bit more than signing an executive order.
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Old 07-22-2012, 11:25 AM
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Quote:
Originally Posted by tommie frazier View Post
mpc-if illinois is a mess (and i think concsesnus agrees), why is the investing world so happy to give them the deal at 1% lower than it should? are investors dumb, or is a fed bailout assumed, or they assume a massive reorg of state finances is coming?
Because they have the ability to tax, and the taxpayers haven't been completely squeezed yet...there's still a lot of services that can be cut.
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  #57  
Old 07-23-2012, 12:09 PM
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it's the structure of the deal. generally speaking, bonds guys/gals usually get it correct... equity guys/gals usually get it wrong.
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  #58  
Old 12-14-2012, 05:41 PM
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http://my.chicagotribune.com/#sectio.../p2p-73688492/

Quote:
CHICAGO, Dec 13 (Reuters) - Illinois' public pension
funding problems, likely to persist if not worsen, led Moody's
Investors Service on Thursday to revise the state's credit
outlook to negative from stable, putting more pressure on state
lawmakers to act.

Illinois' finances are buckling under a $96.8 billion
unfunded pension liability while Governor Pat Quinn and various
state lawmakers are pushing to get various reform measures
passed by the legislature in early January.

But Moody's, which affirmed Illinois' A2 rating, said the
passage of any reforms stands a good chance of being challenged
in court on the basis of strong state constitutional protections
for pension benefits.

"Political pressures, coupled with the threat of litigation,
may mean that any reforms enacted have only a marginal effect on
liabilities," Moody's said in a statement.
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Old 01-27-2013, 01:31 PM
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http://my.chicagotribune.com/#sectio.../p2p-74162460/

Quote:
Illinois' credit standing took another tumble on Friday as Standard & Poor's Ratings Services downgraded the state by one notch to A-minus and raised the possibility it could fall further.

S&P, which had lowered Illinois to A from A-plus in August, placed a negative outlook on the lower rating, saying legislative consensus and action would be needed to tackle challenges, including the state's huge unfunded public pension liability.

"While it is unusual for a state rating to fall into the BBB category, lack of action on pension reform and upcoming budget challenges could result in further credit deterioration, particularly if it translates into weaker liquidity," S&P said in a report.
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  #60  
Old 01-27-2013, 02:32 PM
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It is just a matter of time.
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