SUBSCRIBE to Capitol Fax      Advertise Here      Mobile Version     Exclusive Subscriber Content     Updated Posts    Contact
CapitolFax.com
To subscribe to Capitol Fax, click here.
Traders pushing up state bond yields, but no state issuances on horizon

Wednesday, Aug 6, 2014

* Bad news

Illinois is back in the doghouse among investors in the $3.7 trillion municipal-bond market.

The extra yield investors demand to own 10-year Illinois bonds rather than AAA munis has surged 0.55 percentage point since May to 1.64 percentage points, data compiled by Bloomberg show. The gap grew after lawmakers on May 31 passed a budget with a $2 billion hole. Then last month, the state Supreme Court ruled that government retirees’ health-insurance premiums were shielded from cuts, and Standard & Poor’s changed its outlook on Illinois to negative.

But it has no impact on state sales for now

The penalty may have little immediate consequence. Illinois has no plans to borrow for the rest of 2014, Abdon Pallasch, the state’s assistant budget director, said in an e-mail.

And, obviously, some traders are just too ideological to be smart about investing

Not all investors are shunning the state. With muni yields close to generational lows, investors are shifting into riskier securities such as those from charter schools and senior-living communities. Those bonds are among the most likely to default, according to data from Municipal Market Advisors.

Illinois offers “a better risk-reward trade-off than other parts of the market,” said Lyle Fitterer, who helps oversee $34 billion of munis at Wells Capital Management in Menomonee Falls, Wisconsin. “You’d rather own a charter school than the state of Illinois? You have to take a step back and ask if that makes sense.”

Exactly.

* The Rauner campaign’s response…

“Illinois’ credit rating has been downgraded 13 times under Pat Quinn and now, because of his failed leadership, our state’s economy and finances are still broken. Pat Quinn put special interest politics ahead of Illinois workers. We need to change direction before it’s too late.” – Rauner campaign spokesperson Mike Schrimpf […]

There are real opportunities to address the state’s structural deficit. To do that, we need to shake up Springfield and bring back Illinois – and voters will get that opportunity in November when they elect Bruce Rauner to be their next governor.

You gotta love how they think repeating “shake up Springfield and bring back Illinois” will solve all our problems.

You can’t fix the structural deficit with magic fairy dust words.

- Posted by Rich Miller        


20 Comments
  1. - Anonymoiis - Wednesday, Aug 6, 14 @ 11:13 am:

    ==You can’t fix the structural deficit with magic fairy dust words.==

    But you can win elections with it


  2. - Bill White - Wednesday, Aug 6, 14 @ 11:15 am:

    This quote is true: “You can’t fix the structural deficit with magic fairy dust words.”

    But so is this quote: “What Bruce has gotta try to do is not get in the weeds on a lot of issues.”

    Magic fairy dust does work well for campaigning.

    For governing? Not so much.


  3. - Formerly Known As... - Wednesday, Aug 6, 14 @ 11:17 am:

    This is a self-inflicted wound “after lawmakers on May 31 passed a budget with a $2 billion hole”.

    That was a nice 5 month stretch there where our borrowing costs were actually improving rather than getting worse. Now, back to the routine.


  4. - Formerly Known As... - Wednesday, Aug 6, 14 @ 11:18 am:

    Someone please wake me when our state no longer has the worst credit rating in America.


  5. - Bill White - Wednesday, Aug 6, 14 @ 11:18 am:

    This excerpt from one link is interesting:

    === Not all investors are shunning the state. With muni yields close to generational lows, investors are shifting into riskier securities such as those from charter schools and senior-living communities. Those bonds are among the most likely to default, according to data from Municipal Market Advisors. ===

    Bonds issued by charter schools and senior living communities are among the most likely to default?

    Aren’t those the sectors Bruce Rauner focuses on?


  6. - Mighty M. Mouse - Wednesday, Aug 6, 14 @ 11:19 am:

    ===You gotta love how they think repeating “shake up Springfield and bring back Illinois” will solve all our problems.===

    Vote for the guy who talks in meaningless slogans. That’s the ticket. What could possibly go wrong?


  7. - Demoralized - Wednesday, Aug 6, 14 @ 11:22 am:

    ==You can’t fix the structural deficit with magic fairy dust words.==

    Exactly. And I don’t think the ratings agencies will respond too well to cutting revenue sources to the state, which will create a bigger hole in the budget than exists now and put us even more out of balance.


  8. - VanillaMan - Wednesday, Aug 6, 14 @ 11:25 am:

    We all know how important it is to take someone in a delicate medical condition and shaking them awake. They seem to just snap right back, don’t they?

    I always recommend shaking something that seems to be ready to completely collapse. It knocks off all that stuff just barely holding on. Everything gets better after a good shaking, right?

    Can the shaking already, Mr. Rauner. You’re scaring voters away who are barely holding on!


  9. - DuPage - Wednesday, Aug 6, 14 @ 11:25 am:

    I had read the bond houses are upset not so much about the debt per se as the Illinois decision to REDUCE revenue when they know it will not be enough to pay the bills.

    Rauner: Watch me brush that iceberg out of the way with the front of the ship.


  10. - Anonymous - Wednesday, Aug 6, 14 @ 11:33 am:

    ==The penalty may have little immediate consequence.==

    We’re in the current situation because of statements like this that help us ignore our cognitive dissonance.


  11. - PublicServant - Wednesday, Aug 6, 14 @ 11:33 am:

    I understand the Magic Fairy Dust was imported from his Cayman holdings.


  12. - Oak - Wednesday, Aug 6, 14 @ 11:40 am:

    “Vote for the guy who talks in meaningless slogans.”

    It proved a winner for Hope, Change we can believe in, and Yes we can.


  13. - Neglected stepchild - Wednesday, Aug 6, 14 @ 11:40 am:

    Like re-electing an incompetent boob is going to accomplish anything?


  14. - ZC - Wednesday, Aug 6, 14 @ 11:47 am:

    It has to be asked at some point, does Rauner really believe what he’s saying? Is he in his heart of hearts, in other words, a hard-core “supply sider,” someone who believes cutting taxes on the rich generates its own onrush of productive investment?

    He might you know. Which is a scary thought, that our next governor might be in thrall to an idea now debunked in an introductory college economics class. But never underestimate the power of The Money to cloud the cognitive faculties of the generally-bright .01 percenters. If the last ten years have taught us anything, they’ve taught us that.


  15. - Skeptic - Wednesday, Aug 6, 14 @ 11:53 am:

    VM: Maybe he should be anti James Bond-ish and change it from “shaken” to “stirred”?


  16. - Louis G. Atsaves - Wednesday, Aug 6, 14 @ 12:17 pm:

    The magic fairy dust ideology comes from passing and signing a “balanced’ budget with over 2 billion dollars of red ink. From passing and signing “pension reform” that the Illinois Supreme Court has just killed by calling it unconstitutional. By pretending the multiple bond downgrading episodes thus far still have some kind of a sunny picture. That our bottom feeder rankings are somehow still meaningless.

    I have a number of members of my family in the financial markets. They invest on the basis of the best and safest returns to their clients.

    I’ve never heard ideology enter into that equation. The ideology they live by is “making money” for their clients and themselves.


  17. - PolPal56 - Wednesday, Aug 6, 14 @ 12:18 pm:

    V-Man, nice analogy, and I think you’re on to something.

    Certainly State employees could take a break from the beatings.

    And as far as “magic fairy dust words” go, while we don’t need that, Illinois could sure use some cheerleaders. At least half of our “negative economic climate” is simply due to miasma created by the negativity spouted by Illinois media, pundits and politicians. We have become a self-fulfilling prophecy!


  18. - steve schnorf - Wednesday, Aug 6, 14 @ 8:04 pm:

    Me, at those yields I’m going to look at buying some bonds cause even those better rated revenue bonds default sometimes, state full faith and credit bonds don’t


  19. - steve schnorf - Wednesday, Aug 6, 14 @ 8:50 pm:

    and so 2.7% federal tax free, 4 year maturity, tax bracket yield equivalent to a 4 year 3.6% CD


  20. - Angry Chicagoan - Thursday, Aug 7, 14 @ 6:57 am:

    As long as Pat “Cassandra” Quinn keeps being ignored, dissed or otherwise shunted aside by the courts, Republicans, legislative Democrats, unions and others, our credit rating is going to keep going down. Rauner needs to explain exactly how he is going to do better. Repeating the mantra “I’m not Pat Quinn” may cut some ice in bringing a few people around, but it’s nowhere close to adequate to fix our troubles. And Quinn will effectively have the same advantage if he has another four years in his back pocket and other politicians are therefore forced by default to take some responsibility.


TrackBack URI

Sorry, comments for this post are now closed.


* I'm not buying it
* Sick day
* Yesterday's blog posts

Support CapitolFax.com
Visit our advertisers...

...............

...............


Search This Blog...

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

Search the 98th General Assembly By Keyword

          
        * Tim Cook Holds Firm On iMessage Security: It’s Encrypted, We Don’t Have A Key
        * U2's 'Songs of Innocence' Accessed Over 33 Million Times Since Start of iTunes Promotion
        * Today Calendar gets a taste of Material Design in beta
        * Early iPhone 6 benchmarks show similar performance to iPhone 5s
        * Flud torrent downloader reaches version 1.0
        * Verizon wants to help you upgrade to an iPhone 6 (or other phone) early
        * Here’s what Android Wear OEMs and Pebble can learn from the Apple Watch

        * HTC Nexus 9 Keyboard Accessory Spotted At The NCC
        * AT&T, Sprint To Offer LG G3 Vigor
        * DisplayPort 1.3 Could Pave The Way For 5K iMacs/Thunderbolt Displays
        * The Fully Loaded Briefcase
        * Connecticut AG Asks Tim Cook How They Will Handle Apple Watch’s Data Security
        * Microsoft’s 30th September Invites Hints At Windows 9′s Announcement
        * Microsoft: Minecraft Will Be Used To Teach Kids About Science And Technology

        * White Sox likely to stay with six-man rotation
        * Konerko moving toward return during road trip
        * Abreu learns from Konerko's professionalism
        * Reading Room: Jose Abreu ties a White Sox rookie record his way
        * Twins 6, White Sox 4: Sweep hopes evaporate early
        * Danks looks to finish rough second half on high note vs. Royals
        * Abreu ties White Sox rookie home run record


        Main Menu
        Home
        Illinois
        YouTube
        Pundit rankings
        Obama
        Subscriber Content
        Durbin
        Burris
        Blagojevich Trial
        Advertising
        Updated Posts
        Polls

        Archives
        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

        Syndication

        RSS Feed 2.0
        Comments RSS 2.0
        WordPress

        Loading


        * Gov. Quinn keeps animal abuser on state payroll.....
        * AIDS Run and Walk Chicago wraps up with over $3.....
        * AIDS Run and Walk Chicago wraps up with over $3.....
        * Governor candidates spotlights on business, hiring..


        * Students sickened, carbon monoxide leak suspected
        * Governor candidates focus on business, hiring
        * 2nd year of Illinois osprey project wraps up
        * Durbin's views on issues as he faces re-election
        * AP Interview: Durbin denies 'bullying' businesses
        * Carbon monoxide suspected in student illnesses
        * Springfield cemetery restoring Abe Lincoln's vault
        * Peoria cricket group attracts Indian immigrants
        * Slain Illinois cab driver's family awaits justice
        * Repair work delayed by a day on St. Louis bridge

        * Quinn, Rauner clash on business, hiring
        * Coaltion forms to push school funding reform
        * Rauner’s education plan raises eyebrows
        * Governor’s race a tale of business climates
        * Medical marijuana law sponsor defends secret bids
        * Fired IDOT workers sue, say they are ‘political cover’ for Quinn
        * Illinois still employs 173 'improper' state hires
        * Fired IDOT workers sue, say they are 'political cover' for Quinn
        * State lawmakers propose surcharge to pay for police body cameras
        * Surcharge sought for police cameras

        * Lampert agrees to lend Sears $400 million
        * United offers up to $100,000 if workers leave
        * U of C, UIC among finalists for Obama library
        * Sen. Durbin denies 'bullying' business
        * Mike Madigan pulls in $358,000 — in one weekend


        * 9/11 survivor recalls in Chicago speech harrowing moments
        * Gold Coast boutique hit by burglars
        * Jury finds man guilty of killing girl in Indian Head Park
        * Mourners struggle with Indiana officer’s death; funeral is Monday
        * Hundreds pay homage at slain Merrillville officer’s funeral
        * Mourners struggle with Indiana officer’s death; funeral is Monday morning
        * Man charged in beating death held on $2 million bond
        * No-homework policy improves home life for younger students at one CPS school
        * Gold Coast boutique robbed; burglars may have driven through front door
        * Report released on shooting death of Merrillville cop


        * Naperville man contracts West Nile virus
        * Man charged with trying to kill police officer
        * Pedestrian killed in crash involving Wheeling officer, 'wanted to succeed...help our family'
        * Case of girl, 14, killed in Indian Head Park home goes to jury
        * Trial set for cop charged in woman's death
        * Slain Merrillville Officer Nick Schultz honored
        * Handyman who took guinea pig gets probation for trespassing
        * Man, 70, charged with child sex assault
        * Tillman out for season with torn triceps
        * Champaign anchor Dave Benton has terminal cancer


        * Schools CEO: privatizing janitorial services not 'as smooth as we would like'
        * What's The Best Way To Help Kids In Struggling Schools?
        * Quinn Defends Public Education, Though He's A Product of Private Schools
        * Local Response To Ferguson
        * AFSCME Puts Aside Differences, Endorses Quinn
        * The Future Of Downtown Springfield Inc. In Jeopardy
        * A Practice In Poverty
        * Treasurer Candidate Tom Cross Says He Would Sue The Legislature To Force A Balanced Budget
        * Fired IDOT Workers Sue Quinn Administration
        * Inspector's Report Reveals Clout Hiring At IDOT


        * Quinn, Rauner clash on business, hiring
        * Becker Family: Our community is better united
        * Coaltion forms to push school funding reform
        * Rauner’s education plan raises eyebrows
        * Our Opinion: It’s time to get serious about sewers in Springfield
        * Bernard Schoenburg: Be careful when they talk of property taxes
        * Charles Krauthammer: Obama’s uncertain trumpet, again
        * Governor’s race a tale of business climates
        * Statehouse Insider: Christie should feel at home in Illinois
        * Susan Koch: Examples of excellence showcased in honors program


        * News-Gazette SportsPage 9/15/14
        * Simon visits Du Quoin school
        * Updated: Champaign police investigate bank robbery
        * Monday Rewind: Plays of the Game Washington
        * VA leaders in Danville to hear public, government concerns
        * Help solve the murder of Werner Von Black while munching on dinner
        * Sheriff, police chief support body cameras for officers
        * 'Slap in the face': Highland district officials consider filing complaint against teachers union
        * Shoe donations exceed Scouts' expectations
        * 'Our last shot': Sheri Coleman's family gets another day in court


        * Hurricane Odile slams Mexico's Baja California
        * Fox Valley police reports
        * Tri-Cities police reports
        * Union says layoffs will hurt school cleanliness
        * Jesse White vows this will be his last term – again

        * Former "youngest member of Congress" to vi...
        * Congressman Aaron Schock Reacts To Preside...
        * Congressman Schock Congratulates Local Her...
        * Local Letter Carrier Honored as a Hero - C...
        * House Votes to Condemn GITMO Detainee Rele...
        * Issa, Capito, Chabot, Meeks, and Schock jo...
        * Letter: Some questions for Schock about In...
        * Schock travels to India to promote humanit...
        * Congressman leads humanitarian trip to Ind...
        * Share Modi's resolve to fight poverty in I...

        * AP Interview: Durbin denies 'bullying' bus......
        * AP Interview: Durbin denies 'bullying' bus......
        * AP Interview: Durbin denies 'bullying' bus......
        * AP Interview: Durbin denies 'bullying' bus......
        * AP Interview: Durbin denies 'bullying' bus......

        * Op-Ed: Mark Kirk has more to fear than Mic......

        * Richard Skoda’s dreams.
        * Anita Alvarez's husband investigated for tax exemptions
        * Durbin abruptly cuts off interview with hometown TV station
        * U.S. Senate Moves Forward With Paycheck Fairness Act
        * Senate Republicans Quash Citizens United Amendment
        * Illinois Education Association Endorses Schneider
        * Report: Wage Theft Costs U.S. Workers Billions Of Dollars Annually (UPDATED)
        * UPDATE x1: New Rauner Ad: "No Social Agenda" Means Pro-Abortion and Pro Gay Marriage
        * Chicago Magazine asks: "Will the Real Bruce Rauner Please Stand Up?"
        * Quinn Leading Rauner In New Poll


        * Rauner renews call for Quinn to fire illegal patronage hires
        * Public Betrayal: The Quinn Patronage Scandal Unfolds
        * Sun-Times Report: In Illegal Hiring Scandal, Pat Quinn Protects “Kingmaker” Kin
        * Governor Quinn Announces Clean Water Investments in Stickney and Burbank - Projects Will Modernize Infrastructure, Combat Damaging Floods and Create Jobs
        * Governor Quinn Honors “Latinos Building Illinois” - Thompson Center Exhibit Showcases Trailblazers For Latino Heritage Month




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