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* The Rauner administration’s response to yesterday’s $550 million bond sale…
“It’s clear from today’s bond sale that investors realize Illinois now has a governor that is trying to turn the state around and right its fiscal ship,” Kelly said in a statement.
* But…
New analysis by the University of Illinois Institute of Government and Public Affairs demonstrates the consequences of the state’s poor credit rating.
On June 16 the state of Illinois sold $550 million in General Obligation Bonds. This was the first bond issue since the state’s recent credit rating downgrades by Moody’s and Standard and Poor’s. The sale also occurred as Illinois ends FY16 without a budget, and failed to pass a budget for FY17.
The analysis shows that the state received $70 million less for this bond sale than it would have received ten years ago, and $12 million less than it would have received six months ago.
The full report is here.
* Also, from the Bond Buyer…
Illinois paid a steeper penalty to borrow Thursday after a fresh round of downgrades but a municipal market offering historically low yields helped disguise the spreads.
A market flush with buyers and a dearth of yield staved off more severe damage for the $550 million competitive general obligation offering from a state gushing red ink after almost a year without a budget in place.
Municipal professionals said the outcome indicates that the state of the bond market and belief in the strength of Illinois’ GO bond statutes outweighed its morass of fiscal woes and political gridlock. […]
Illinois paid the highest yield penalty over the triple-A curve imposed on a sovereign state, one that’s risen since it last sold bonds in January.
* Related…
* Wall Street sends flowers and candy to Toni Preckwinkle: The bond folks clearly liked Preckwinkle’s highly controversial move a year ago to bump the county’s sales tax up a penny on the dollar, an action that raised the combined sales tax in Chicago to 10.25 percent and will net $470 million a year, most of which will go toward pensions.
posted by Rich Miller
Friday, Jun 17, 16 @ 9:36 am
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“Hi, ck-
Bad-mouthing the state you are currently the governor of and making it more expensive to bond out isn’t sobering to cheer about because that giver or is now in charge.
Bonds are being bought because they are a constitutional payable expense, thus making them attractive in safety, and the bad mouthing by your boss makes the return even greater for the buyers.
I’m sure Madeupville will applaud you ridiculously flawed logic, however.
Thanks!
ow”
Comment by Oswego Willy Friday, Jun 17, 16 @ 9:42 am
“…something to cheer about because a certain govenor is now in charge.”
Comment by Oswego Willy Friday, Jun 17, 16 @ 9:43 am
Real Estate:
Location. Location. Location.
Politics:
Message. Message. Message.
Comment by Chicago_Downstater Friday, Jun 17, 16 @ 9:44 am
–“It’s clear from today’s bond sale that investors realize Illinois now has a governor that is trying to turn the state around and right its fiscal ship,” Kelly said in a statement.–
Yeah, except nobody said that. The savior narcissism is embarrassing.
The governor was saying the same things; that investors told him, personally, that they were buying because of him, personally.
Do you think he really believes those things when he says them? Like that he has “dozens of corporations lined up” to relocate to Illinois? Or is that just for some of the people, all of the time?
You can read all the financial press on the sale, and you won’t find a mention of the governor, at all, except in terms of “the governor and legislature are in a year-long budget impasse.” That’s it.
Governors have little influence on global market and economic factors. You won’t find an economics course at any university that says that they do.
But in the cult of the Turnaround Agenda, the Man on the Horse can bend the economy to his will.
It’s creepy.
Comment by Anonymous Friday, Jun 17, 16 @ 9:47 am
Pardon, 9:47 was me.
Comment by wordslinger Friday, Jun 17, 16 @ 9:47 am
“Illinois paid a steeper penalty to borrow”
An Illinois spokesman said the 3.74% was the lowest in Illinois history!
Seems like someone is spinning a story.
Comment by Huh? Friday, Jun 17, 16 @ 9:49 am
Omg
Comment by Blue dog dem Friday, Jun 17, 16 @ 9:52 am
Seems like the bar has been set pretty low.
Comment by Anonymous Friday, Jun 17, 16 @ 9:54 am
=== wordslinger - Friday, Jun 17, 16 @ 9:47 am:
Pardon, 9:47 was me. ===
That explains why that “Anonymous” post was so coherent. Not what we get from the typical trolls who don’t have the brains to pick a name.
Well said Word.
Comment by Norseman Friday, Jun 17, 16 @ 9:56 am
–“Illinois paid a steeper penalty to borrow”
An Illinois spokesman said the 3.74% was the lowest in Illinois history!
Seems like someone is spinning a story.–
Actually, both statements are true. The penalty is due to the state’s low credit ratings as compared to other munis, while the low interest rate is due to global market conditions.
Guess which of those factors governors and legislatures can actually influence?
Comment by wordslinger Friday, Jun 17, 16 @ 9:57 am
So I’m confused here. The Governor seems to want to play the victim and let us all know how nothing is his fault until it’s inconvenient to do so, at which time he chooses to take credit.
Comment by Demoralized Friday, Jun 17, 16 @ 9:58 am
The amount of delusion within this administration is breathtaking…Word rightly points out the “creepy” aspect, but in a serious way - it’s dangerous. Narcissism of this level is an imaginary line away from mental illness - a cult like cabal agreeing with every word spoken by the mind of the Governor - though none are uttered for anyone to hear. Serious pressure to perform does strange things to people…maybe it’s time for Bruce to take a long summer vacation.
Comment by Captain Illini Friday, Jun 17, 16 @ 10:00 am
BVR and the global bond market he controls.
ck is almost as funny as Louis C.K. Not quite, though.
Comment by cdog Friday, Jun 17, 16 @ 10:02 am
“It’s clear from today’s bond sale that investors realize Illinois now has a governor that is trying to turn the state around and right its fiscal ship,”
Didn’t 1.4% say that borrowing was a bad idea and a tax hike on future generations?
Comment by Huh? Friday, Jun 17, 16 @ 10:05 am
Rauner should just come out and say what is really on his mind:
“I am the best governor Illinois has ever had. And everyone now recognizes that too!”
Comment by Winnin' Friday, Jun 17, 16 @ 10:09 am
“Illinois now has a governor that is trying to turn the state around and right its fiscal ship,”
Too bad that the rudder has sheared off, the sails are shredded, the hull is sprung, the pumps can’t keep up with the water flooding the holds and the ship’s course is headed for the shoals. Captain Queeg is looking for his strawberries.
Comment by Anonymous Friday, Jun 17, 16 @ 10:10 am
Preckwinkle 2018?
Comment by Anonymous Friday, Jun 17, 16 @ 10:16 am
Damn, Word. I wanted credit for 9:47.
Comment by Anonymous Friday, Jun 17, 16 @ 10:18 am
They’re getting a little desperate in trying to spin positives for Rauner.
Comment by Wensicia Friday, Jun 17, 16 @ 10:25 am
=== wordslinger - Friday, Jun 17, 16 @ 9:47 am:
Pardon, 9:47 was me. ===
While reading that comment I was assuming it was Wordslinger. I had to go back up and see that it actually was listed as anonymous. You definitely have a unique voice - well stated.
Comment by Consideration Friday, Jun 17, 16 @ 10:37 am
My govenor has low friends in high places
Comment by Rabid Friday, Jun 17, 16 @ 10:52 am
So, basically, yesterday Rauner diverted $70 million from programs serving Illinois families - at a time we owe the providers of those services billions - and put it in the pockets of Wall Street.
Or is there another way of looking at it that I am missing, ck?
Comment by Juvenal Friday, Jun 17, 16 @ 10:55 am
BTW, don’t say I didn’t warn you, Team Rauner. Here is the AP Headline:
Illinois borrows millions for building despite budget mess
“Rauner was asked this week how he can justify borrowing money for buildings when taxpayers relying on unfunded human services are suffering. He said borrowing should not be done to pay for operations, but it’s ‘good financial management’ to take out loans for concrete and steel.”
Good financial management, maybe. Under the right circumstances.
But to use the household spending model which you so love, what you’re basically doing is taking out a second mortgage to put an addition on your house, after racking up three months of unpaid credit card bills and with no means to pay for next week’s groceries or your kid’s college tuition.
Comment by Juvenal Friday, Jun 17, 16 @ 11:15 am
- good financial management’ to take out loans for concrete and steel.” -
Hilarious considering when he first took office he said he wasn’t a fan of borrowing for infrastructure.
Do private equity guys actually need to know anything?
Comment by Daniel Plainview Friday, Jun 17, 16 @ 11:48 am
== Officials say the refinancing will save Cook County taxpayers $56.6 million in interest costs over the next 15 years, measured in 2016 dollars.==
Preckwinkle did the right thing in raising revenues to pay the county’s bills. Unfortunately, the sales tax on goods is pretty regressive. Maybe the state will extend the sales tax to services that only affluent people can afford.
Comment by anon Friday, Jun 17, 16 @ 12:04 pm
Heckuva job Raunie!
Comment by Carhartt Representative Friday, Jun 17, 16 @ 12:07 pm
Good gosh, the plaudits to Cook County are a misguided. Even if the revenue from the increase is dedicated to retiree pensions, the rate of increase for those pensions will quickly outpace the increase in revenue. Then what?
Its nothing to cheer about when a municipality has both the highest sales tax and the worst delivery of governmental services of any major metro area in the country. Not to mention the highest murder rate.
Comment by In a Minute Friday, Jun 17, 16 @ 12:22 pm
We have lost so much money and for what? What do we have to show for it?
Comment by burbanite Friday, Jun 17, 16 @ 4:09 pm