Capitol - Your Illinois News Radar » Why did Illinois yank its bond issue?
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.

* More shenanigans!
* Saturday campaign money report
* *** UPDATED x2 *** Shenanigans!
* Tribune drops bombshell on Biss running mate
* Reader comments closed for the weekend
* Rauner: "Madigan has rigged the Democratic primary for Pritzker"
* New Ives radio ad claims Democrats are trying to help Rauner, while Brady does Rauner robocall
* *** UPDATED x1 - DGA responds *** Elections board says DGA should file disclosure for Ives ad
* SUBSCRIBERS ONLY: Jones; IEA/IFT; Reis; Mitchell; Edgar
* ISRA, Drury both try to claim Raoul inserted "poison pill" into gun bill
* Pro-life group launches GOTV effort for Lipinski
* *** UPDATED x1 *** Rauner opens new online track against Ives
* Erika Harold still can't remember comments, but says "I was wrong"
* Rauner calls Madigan "a unified force of bad, of evil"
* Sen. Duckworth gets involved in another state central committee race
* *** UPDATED x2 *** Has Pritzker gone to ground?
* Illinois House Bill HB 4900 Wastes Government Resources
* McCann, barred from SGOP caucus meeting, claims Rauner threatened to "destroy you and your family"
* *** UPDATED x1 *** Caption contest!
* Obama mailer kerfuffle in Lipinski district
* Rauner attended Quincy campaign event after Quincy veterans' home presser
* After spending millions in Dem primary, Rauner accuses "Washington liberals" of "hijacking" the GOP primary
* Yesterday's stories

Visit our advertisers...








* Daniel Biss holds campaign rally at Bottom Loun.....
* Q & A with Illinois Gubernatorial Candidates - .....
* Illinois governor race more fierce, costly as p.....
* Illinois governor race more fierce, costly as p.....
* Senate GOP leader talks guns, voter fraud..
* Here are the questions for Tuesday — the answer.....
* Why is the race for Cook County Assessor gettin.....
* Here are the questions for Tuesday — the answer.....
* Tom Kacich | Democratic early-voting turnout is.....
* Editorial: Don’t lose chance to frame debate; v.....

* Judge sides with inmate on prosthetic leg, toilet access
* Illinois primary puts focus on security of state voter rolls
* City of Chicago increasing security at Millennium Park
* Effort underway in Kane County to save 1854 schoolhouse
* Holcomb signs bill to replenish eroded NW Indiana beaches
* EXCHANGE: Historian doesn't want hero's story lost
* EXCHANGE: Losing a limb has not handicapped Pekin bowler
* Illinois governor race more fierce, costly as primary nears
* Judge gives FBI more time in alleged serial killer case
* Michigan shipwreck hunters find schooner that sank in 1873

* As primaries loom, downstate Democrats look for a way back
* Pritzker defends putting $69.5 million of his fortune into campaign
* Illinois governor race more fierce, costly as primary nears
* Madigan backs Dem central committee incumbent in 13th
* Trump factor looms large in Illinois governor primary campaigns
* Ray LaHood brokers deal for O'Hare expansion
* McCann says Rauner threatened to 'destroy' him in 2015 over vote
* Rauner looking into state buying vacant nursing home in Quincy
* Luciano: What if Downstate dumped Chicago and formed new state?
* AP review: Push for gun laws faces resistance in most states

* Crain's tells the stories of women in business
* Like our roundup? Share it around.
* Amazon search team in Chicago next week
* Amazon HQ2 search team visiting Chicago March 21-22
* Pension mess? You'd hardly know it from 2018's gubernatorial candidates.

* Garage fire leaves Palatine house uninhabitable
* Portage Park intersection, once a shopping mecca, could be turning the corner
* Running tab for DOJ investigation of CPD: $7.4 million and counting
* Mock Draft 4.0: Predicting 32 picks – a Bears surprise – after trades, signings
* Dr. T. Berry Brazelton, influential pediatrician, advice columnist, dead at 99
* Here are the questions for Tuesday — the answers are up to you
* Sean Bean on his many deaths and ‘Game of Thrones’ legacy
* Man shot in Gage Park
* Sun-Times/WBBM Religion Roundup: Anti-Semitic incidents in Illinois up sharply
* 2 wounded in shooting on Dan Ryan

* Turtle racing's had a long, slow burn in Chicago
* Russia votes but outcome is clear: 6 more years of Putin
* Trump rails against Mueller investigation, dismisses McCabe's notes as 'Fake Memos'
* Illinois recruit Ayo Dosunmu leads Morgan Park to second straight Class 3A state title
* NFC North gets a makeover during frenzied start to free agency
* 7 shot overnight, 1 fatally, including 2 cousins
* Javier Baez starts at shortstop as former Cubs Jon Jay and Jorge Soler start for Royals
* Sentimental journey: Jalen Shaw, Anthony Lynch reminisce as Larkin finishes fourth in state
* Awaiting Supreme Court decision on gambling, pro sports leagues prepare for legal betting
* Plea deal does not resolve acrimony in case of former Lake County coroner

» A Feisty Debate, Offshore Accounts — And Some Side-Eye
» WBEZ’s Chicago and Illinois News Roundup: March 16, 2018
» The Week in Review: Pritzker Slammed Over Offshore Holdings
» Web Extra, The Week in Review: American Airlines Changes Stance
» How Parking Ticket Debt Punishes Black Drivers In Chicago; The Best Illinois Movies
» State Week: Rauner's Gun Veto; Dem's Mean Debate
» #642 Songs About the Music Industry & Antibalas
» March 15, 2018 - Full Show
» Illinois Has Issues: Gov Candidates Talk Marijuana
» Rauner: Replace Legionnaires’-Stricken VA Home With New ‘Ultra-Modern’ Facility

* As primaries loom, downstate Democrats look for a way back
* Pritzker defends putting $69.5 million of his fortune into campaign
* Statehouse Insider: Sadly, the primary campaign is coming to an end
* Bernard Schoenburg: My predictions for Tuesday's primary election
* Our View: A recap of The State Journal-Register’s endorsements
* Bernard Schoenburg: Guessing who will be celebrating Tuesday night
* Madeleine Doubek: Time to end gerrymandering in Illinois
* United Way: Reporting results that matter
* Illinois governor race more fierce, costly as primary nears
* Madigan backs Dem central committee incumbent in 13th

* Photos: St. Patrick's Day in the Quad-Cities
* Illinois 200 | The Daley family legacy runs deep in Illinois, Chicago
* PFOP: Local minister became well-known newspaper columnist
* SIUC faculty will present research 'lightning' talks next week
* Public art could provide 'wow' for the riverfront
* Alexander County enters utility deal with SmartWatt that could save the county
* The primary election is Tuesday. Here's what you need to know before you vote.
* Good cause, fellowship, food draws thousands to Mennonite Relief Sale
* Significant Structures: Burnham Athenaeum
* All-Area Girls' Basketball 2018

* Why Patrick Kane won't leave Blackhawks warmups early again
* Syria's President Assad visits troops on Ghouta's front line
* Young John Glenn's pillowcase featured planets, stars
* Women in Poland protest plans to tighten anti-abortion law
* UK teacher wins $1M teaching prize for inner city work

* 14th District candidates agree: Global war...
* ICOs Draw Fire at US Congressional Hearing...
* What to Expect When Congress Talks ICOs To...
* 7 Democrats talk strategy for winning Tues...
* Letter: Stripped state's rights - Northwes...
* 14th District Dems voice opinions on immig...
* Judge duns US Rep. Bobby Rush for delinque...
* Kennedy blasts Pritzker for “buying off” b...
* In the news
* Candidates share views ahead of election

* Hillary Clinton 'wrong' about Trump voters......
* Durbin blasts Trump for 'desperate and rec......
* Durbin Slams Clinton for Remarks About 'Ba......
* US Senator Durbin: No government shutdown ......
* Senator Dick Durbin: No government shutdow......

* Zinke defends use of Japanese word: How co......
* Congolese mother and child finally reunite......
* Schatz to convene field hearing on false m......
* Congolese mother arrives in Chicago, still......
* Duckworth on Zinke's improper use of Japan......

* Our antiweed governor better take note: downstate is also going to pot
* Hitting Left with the Klonsky Brothers’ election interviews.
* This week.
* Tucker: Washington not worried about male wage crisis
* State of the Legal Industry: A Leading Innovator Concludes that Inefficiency Prevails
* Wednesday, March 14, 2018
* Monday, 3/12/2018
* Online University Programs and Microcredentials Enhance Professional Learning
* AI is the new electricity, says Coursera’s Andrew Ng
* Bolstering Academic Integrity in the Online Classroom

* February Flooding Information
* IEMA Urges People to Prepare for Severe Weather
* Governor issues state disaster proclamation for flooding in Iroquois, Kankakee, Vermilion Counties
* Winter Storm Warnings for Areas Along and North of I-80
* IEMA Encourages People to Prepare for Earthquakes

* The robot dogs I have loved the most
* Weekly poll: Sony Xperia XZ2 takes on its Compact sibling
* A Case of Distrust is a minimalist noir story
* Invest $15 in your future and get working as an Android developer now
* LeVar Burton wants to read you his favorite short stories
* My bubble wrap phone case doubles as an audio experience
* Must read: top 10 Android stories

* Spring Stats Glance
* White Sox announce James Shields as Opening Day starter, because of...
* Cool with No. 2? Avi paces Sox 5-2 win
* Lefty Ross making case for bullpen spot
* Shields honored to be Opening Day starter
* Shields honored to be Opening Day starter
* Shields to start for White Sox on Opening Day

Main Menu
Pundit rankings
Subscriber Content
Blagojevich Trial
Updated Posts

March 2018
February 2018
January 2018
December 2017
November 2017
October 2017
September 2017
August 2017
July 2017
June 2017
May 2017
April 2017
March 2017
February 2017
January 2017
December 2016
November 2016
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

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