SUBSCRIBE to Capitol Fax      Advertise Here      Mobile Version     Exclusive Subscriber Content     Updated Posts    Contact
To subscribe to Capitol Fax, click here.
Why did Illinois yank its bond issue?

Thursday, Jan 31, 2013

* Reuters looks into why Illinois withdrew its bond issue this week

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.”

Illinois is already faced with the highest spreads - 137 basis points in the latest week - over Municipal Market Data’s benchmark triple-A scale among states and cities tracked by MMD, a unit of Thomson Reuters. By contrast, the spread for California, another low-rated, high-debt issuance state, was only 48 basis points in the week ended Jan. 25. […]

Tim McGregor, director of municipal fixed income at Northern Trust, said the state probably would have had little difficulty selling the bonds on Wednesday “with a little bit of yield” given low supplies of debt in the $3.7 trillion municipal market and yield-hungry investors. He added that if Illinois wants to attract lower rates in the market, it needs to fix its finances, particularly pensions.

“Spreads won’t tighten just because they want them to tighten,” he said, adding the state needs to impress the market by tackling pension reforms.

Either way, it was probably prudent to let the furor over the rating reduction die down for a while.

- Posted by Rich Miller        

  1. - wordslinger - Thursday, Jan 31, 13 @ 11:08 am:

    It’s not a good week to issue muni debt. If you can wait, it’s good to wait.

  2. - Dan Johnson - Thursday, Jan 31, 13 @ 11:16 am:

    There’s got to be a better way to borrow money than depending on just the investment banks to underwrite bonds who then resell the bonds to individuals.

    To quote Johnny Depp in Blow: “We’re getting middled.”

  3. - walkinfool - Thursday, Jan 31, 13 @ 11:26 am:

    ==we were getting indications of higher spreads than we were anticipating==

    Seems pretty simple and clear.

    Word: Is there reason to think it will be better in the next few weeks?

  4. - Ahoy! - Thursday, Jan 31, 13 @ 11:26 am:

    Has anybody done any reporting on how the State is using its bonds? I remember when the Capital bill came out, I believe in 2009 and the State was bonding all the new revues for road overlays, or put in another way, selling 20 year bonds for a 10 - 15 year maintenance activity. I wonder what the 25 year bond was for.

    The State also needs to be smarter on what it’s bonding for, especially with the higher cost of borrowing. Sometimes a pay-as-you-go system works to your benefit when borrowing is more expensive. Not saying all bonding is bad, just I question the ability of the State to make good decisions right now.

  5. - wordslinger - Thursday, Jan 31, 13 @ 11:31 am:

    Walk, don’t know. But yesterday, according to Bloomberg the muni market was showing the highest spreads since Jan. 8.

    If the stock market cools off a little bit, it should be better for the seller.

  6. - Jimbo - Thursday, Jan 31, 13 @ 11:31 am:

    Hey Ahoy,

    Remember ARRA? It wasn’t nicknamed American Rampant Repaving Act for nothing. The feds paid for most of those roads.

  7. - PQ's Primary Opponent - Thursday, Jan 31, 13 @ 11:45 am:

    Don’t those big city New York bankers understand that GOD and PQ are fixing everything?? Gee, I guess they dont see the same dynamic as us here in Illinois!

  8. - 47th Ward - Thursday, Jan 31, 13 @ 12:29 pm:

    ===It’s not a good week to issue muni debt.===

    Looks like I picked the wrong week to stop sniffing glue.

  9. - Dan Vock - Thursday, Jan 31, 13 @ 12:41 pm:

    Meanwhile, California got some good news. S&P upgraded its bond rating today:

  10. - Cook County Commoner - Thursday, Jan 31, 13 @ 12:49 pm:

    S & P today raised California’s bond rating to A based on a projected state surplus. Presumably,the underwriters and others in the know were aware of this before Illinois was to float its debt. If a profligate like California can actually or at least give the appearance of fiscal approvement, this would make Illinois paper look worse. Armed with this knowledge, the underwriters probably asked for extra spread.

    Pulling the bond sale was smart, but I don’t see things getting better.

  11. - UST - Thursday, Jan 31, 13 @ 1:28 pm:

    Bill Gross’ Pimco is starting a new bond fund “Dynamic Credit Income Fund” that will be buying junk status bonds. I suggest that Illinois give him a call.
    Lets face it. Based upon the returns of the Illinois retirement funds, market timing is not one of the state’s better achievements

  12. - Anyone Remember? - Thursday, Jan 31, 13 @ 2:21 pm:

    Cook County Commoner -

    California did two things: (1) the voters approved tax increases in the November 2012 elections, taking them from deficit to surplus; and (2) they “fixed” government pensions, as their Constitution does not say “the benefits of which shall not be diminished or impaired.”

  13. - Formerly Known As... - Thursday, Jan 31, 13 @ 3:18 pm:

    Voters passed the tax increase in California, as opposed to lame duck legislators in Illinois.

    It may not make much difference in one’s pocketbook, but Brown managed to get the public to support his tax increase.

    According to PBS, California also made a series of difficult cuts over the years:
    “With budget cuts coming like clockwork, the state’s vaunted college and university systems declined in offerings and in reputation. Schools suffered cutbacks in personnel and programs. Services for the poor were trimmed by $15 billion since 2008. State workers were furloughed…

    He (Brown) faced a $26 billion deficit and started making more cuts and changes, like transferring inmates from the state’s overcrowded prisons to county jails and closing down local redevelopment agencies, using the money for the state budget…”

    We are slowly beginning to do the same.

    Things may well get worse in Illinois before they get better.

    Ideally the Illinois economy will pick up quickly and help alleviate some of the funding crunch.

  14. - xylem - Thursday, Jan 31, 13 @ 3:52 pm:

    Reuters needs to do better reporting. They talk about the need to fix “bloated public pensions.” This is not pension “bloat.” It is insufficient government funding of reasonable pensions. We need to push back on the rhetoric here. Pensions are NOT bloated. The state government failed to fund the pensions like they were obligated to do.

  15. - Rich Miller - Thursday, Jan 31, 13 @ 4:02 pm:

    ===Reuters needs to do better reporting. ===

    I agree. They wanted to use a poll I commissioned which subscribers got today. No way.

  16. - Responsa - Thursday, Jan 31, 13 @ 4:17 pm:

    Madigan’s love letter was not just a shot actoss the bow to the unions, but was also a calculated message being sent to the bond`raters.

  17. - Shemp - Thursday, Jan 31, 13 @ 11:56 pm:

    Most pension amounts paid annually are anything but bloated. However, the age at which many begin drawing and thus the years of contributions vs the years of withdrawals are not in sync with reality in many cases.

Sorry, comments for this post are now closed.

* This just in... $12 million contribution to Leader Durkin, $2 million to Munger
* Reader comments closed for the weekend
* *** UPDATED x2 *** Duckworth doesn't play in Peoria
* *** UPDATED x1 *** Let's be careful out there
* Question of the day
* SUBSCRIBERS ONLY - Political events calendar
* *** UPDATED x1 *** What today's cyber attack could mean for election day
* Rewriting history
* Army Corps of Engineers taking back state park
* Fire everything!!!
* More horrible pension news
* More flowery Madigan praise from Bradley
* Because... Madigan!
* Looking on the dark side
* Lawyers: Mayor Emanuel is "not a policymaker for the city"
* Duckworth has huge cash advantage
* SUBSCRIBERS ONLY - Supplement to today’s edition and a campaign roundup
* Good morning!
* SUBSCRIBERS ONLY - Today's edition of Capitol Fax (use all CAPS in password)
* Yesterday's blog posts

Visit our advertisers...






Search This Blog...

Search the 98th General Assembly By Bill Number
(example: HB0001)

Search the 98th General Assembly By Keyword

* Blass leaks Long Island project, the Huawei Mate 9 Pro
* AT&T buys Time Warner for $85 billion
* Let’s chat Nintendo Switch and LeReactions to LeEco Le Pro 3 | #PNWeekly 223
* Should Microsoft give up on Windows 10 Mobile?
* Google makes it easy to get screen replacements for the Pixel and Pixel XL
* Don’t expect to see any more modular smartphones from LG
* Siri and Pixel's Google Assistant Compete Side-by-Side in New Video

* Getz to oversee White Sox Minor Leagues
* Getz to oversee White Sox Minor Leagues
* International draft stands to benefit White Sox
* Davidson reflects on 'whirlwind' 2016 season
* Starting pitcher rankings: White Sox have four of them
* Podcast: 2016 Chicago White Sox Infield Review
* White Sox Rumors: Sox hire Chris Getz as new Director Of Player Dev...


Main Menu
Pundit rankings
Subscriber Content
Blagojevich Trial
Updated Posts

October 2016
September 2016
August 2016
July 2016
June 2016
May 2016
April 2016
March 2016
February 2016
January 2016
December 2015
November 2015
October 2015
September 2015
August 2015
July 2015
June 2015
May 2015
April 2015
March 2015
February 2015
January 2015
December 2014
November 2014
October 2014
September 2014
August 2014
July 2014
June 2014
May 2014
April 2014
March 2014
February 2014
January 2014
December 2013
November 2013
October 2013
September 2013
August 2013
July 2013
June 2013
May 2013
April 2013
March 2013
February 2013
January 2013
December 2012
November 2012
October 2012
September 2012
August 2012
July 2012
June 2012
May 2012
April 2012
March 2012
February 2012
January 2012
December 2011
November 2011
October 2011
September 2011
August 2011
July 2011
June 2011
May 2011
April 2011
March 2011
February 2011
January 2011
December 2010
November 2010
October 2010
September 2010
August 2010
July 2010
June 2010
May 2010
April 2010
March 2010
February 2010
January 2010
December 2009
November 2009
October 2009
September 2009
August 2009
July 2009
June 2009
May 2009
April 2009
March 2009
February 2009
January 2009
December 2008
November 2008
October 2008
September 2008
August 2008
July 2008
June 2008
May 2008
April 2008
March 2008
February 2008
January 2008
December 2007
November 2007
October 2007
September 2007
August 2007
July 2007
June 2007
May 2007
April 2007
March 2007
February 2007
January 2007
December 2006
November 2006
October 2006
September 2006
August 2006
July 2006
June 2006
May 2006
April 2006
March 2006
February 2006
January 2006
December 2005
April 2005
March 2005
February 2005
January 2005
December 2004
November 2004
October 2004

Blog*Spot Archives
November 2005
October 2005
September 2005
August 2005
July 2005
June 2005
May 2005


RSS Feed 2.0
Comments RSS 2.0


* Labor super PAC links GOP, Trump - Herald & Review..
* Letter: Jimenez ads unfair to DelGiorno - The S.....
* 102316-dec-loc-dempac - Herald & Review..
* School woes seen as deeper than funding - Alton.....
* Rauner administration awards 1100 non-union wor.....
* Money keeps flowing as Election Day nears - Qua.....

* Rauner administration awards 1,100 non-union workers bonuses
* Rauner administration awards 1,100 non-union workers bonuses
* Chicago woman faces federal charges in alleged ticket scam
* Chicago to combine libraries, affordable housing in 3 sites
* Thousands expected for annual Halloween parade in Chicago
* Illinois man gets 75 years for murder of ex-girlfriend
* EXCHANGE: Cryptozoologist on hunt for knowledge
* EXCHANGE: Illinois village flushing 133 miles of water mains
* Michigan revises plan to reduce Lake Michigan fish stocking
* Drunken driving education program reinstated in Springfield

* Statehouse Insider: Tomorrow's a new day; in Illinois, that may not be good
* Cook County lawyer who posed as judge criminally charged
* 1,100 non-union state workers getting $3,016 bonuses
* Springfield veteran honored for volunteer work
* Central Illinois soldier killed in Afghanistan
* Rauner administration awarding more than $3 million in bonuses to non-union workers
* SIU injury-prevention program reinstated through stopgap budget
* Survey: 386 state jobs could relocate to Springfield
* SIU injury-prevention program reinstated through state's stopgap spending plan
* Illinois unemployment rate holds at 5.5 percent

* AT&T buying Time Warner in $86 billion deal
* It's official: AT&T buys Time Warner for $85 billion
* There's a new way to replace old gas mains—but not in Chicago
* Is Neapolitan's Kelly Golden the new reigning queen of fashion?
* Big rent increases headed to the burbs

* CTA running Yellow Line L service till midnight for Cubs fans
* Man shot in Chicago Lawn
* Blackhawks rally past Toronto for shootout win
* Brown: Better ways to deal with wannabe judge than indictment
* Sweet: Pritzker, Uihlein 2 of Illinois’ biggest political donors
* Sunday Sitdown: Dericka Hudson, helping girls make it in tech
* Mitchell: ‘Hey, Liberal’ gives a white perspective on integration
* 2 suburban men convicted after being caught with 128 lbs. of weed
* Man shot in Hyde Park
* Paralympic medalist will be U. of I. homecoming parade marshal

* High school coaches: Cubs success comes from hard work, team chemistry
* NLCS Game 6: Cubs lead Dodgers 5-0 in seventh inning
* AT&T buying HBO and CNN owner Time Warner for $85.4 billion
* Trump won't inherit the land, so he's sowing it with salt
* Trump vows to sue assault accusers in speech outlining 1st 100 days in office
* Attacks on the internet keep getting bigger and nastier
* Man dead, teen boy critically wounded in shootings
* Adult film actress accuses Trump of offering $10,000 to come alone to hotel suite
* Kyle Schwarber rejoining Cubs for World Series a real possibility

The widget AQL4JYGHIY powered by Feed Informer does not exist.

* Bernard Schoenburg: DelGiorno apologizes for backer's vulgar Facebook post
* Statehouse Insider: Tomorrow's a new day; in Illinois, that may not be good
* Our Opinion: With poor choices, Clinton gets nod for president
* Cooler temperatures lead to greater needs
* Women for Women tops half million mark
* Cook County lawyer who posed as judge criminally charged
* 1,100 non-union state workers getting $3,016 bonuses
* Springfield veteran honored for volunteer work
* Central Illinois soldier killed in Afghanistan
* Charles Krauthammer: My vote, explained

* LIVE! Selection Saturday
* Update: Woman in fatal Saline County crash identified
* A slight change to Playing Critic
* PODCAST: Fastener's Etc. Post Game 10-22-16
* RI Co. NAACP recognizes youth for achievement
* Boil Order Lifted
* Eight people involved in multiple-motorcycle accident; three injured
* Salukis fill Carbondale to celebrate SIU Homecoming
* Boys and Girls Cross Country Regional
* Class 2A Regional Boys Soccer:Urbana vs Central

* Class 5A pairings
* Boys soccer: First sectional crown for St. Edward
* Class 4A pairings
* Girls volleyball: Pancratz in the playoffs -- one last time
* Class 3A pairings

* House lawmakers overcome hurdle on key tra...
* Rodney Davis talks funding with Bloomingto...
* The agency that fought Illiana gets a new ...
* Rep. Dold takes educational cruise down Ch...
* Lawmakers decry high turnover rate of VA h...
* CBD Oil, and politics
* Simon considering state Senate bid
* Killer Congressman Tom MacArthur trying to...
* Shutdown? State may not notice
* Rep. Bob Dold

* Lanphier Students Get Government Lesson Fr......

* Dems count on Duckworth 'W,' Kirk predicts......
* Democrats count on Duckworth 'W,' Kirk pre......

* Walls closing in on Rhonda Crawford. What should the sanction be?
* Gooseberry Playlot Nears Completion On Malden
* Treasure Island Foods Slated As Anchor Retail Tenant of Maryville Development
* Where's Weyermuller?At #P**ssygrabsback protest at Chicago's Trump Tower
* Top IR picks for third week of October 2016
* Bill Murray crashes White House briefing to boost Cubs
* Comedian Bill Murray crashes White House briefing to boost Cubs
* Gerald V. Cleary appointed to Suriano vacancy in 10th Subcircuit
* Keeping retirement weird. 403(b)s and the teacher pension rip off. And the NEA.
* Opportunity Races: Vote Haney and reelect REALTOR® Patlak for county positions

* Illinois EPA Sponsors Interactive Environmental Education Event with Riverton Elementary School - Riverton Third and Fourth Graders “Dive In!” to Celebrate the Environment
* Illinois Department of Veterans’ Affairs Honors Veteran Mr. George Pempek
* Illinois Partners with State of Telangana, India to Strengthen Smart State Initiatives - State to state agreement to accelerate opportunities and service to citizens
* Illinois EPA Announces Vehicle Emissions Testing Network Updates - New Contract to Offer More Efficient, Less Expensive Tests
* Annual Training Underway For Gas Station Owners, Service Technicans

      Hosted by MCS SUBSCRIBE to Capitol Fax Advertise Here Mobile Version Contact Rich Miller