* Bloomberg looks at how the Statehouse impasse is impacting state bonds…
Yields on the state’s 10-year obligations reached a 16-month high of 4.17 percent last week, data compiled by Bloomberg show. The spread was about 1.8 percentage points above benchmark debt, the widest since December 2013.
Debt from Illinois has lost about 1.3 percent this year, while the entire municipal market is about flat, Barclays Plc data show. […]
“I don’t see how this credit does not get downgraded within the next two months,” said Paul Mansour, head of municipal research in Hartford, Connecticut at Conning, which oversees $11 billion in munis for insurance companies.
Trading in Illinois bonds suggests the municipal market is moving in that direction. Federally tax-exempt general obligations maturing in March 2032 traded Thursday for an average yield of about 4.9 percent. In comparison, a Bank of America Merrill Lynch index of BBB general obligations due in about 17 years has an effective yield of 4.85 percent.
* Meanwhile, in Chicago…
In a measure of how serious Chicago’s financial woes have become, the city will pay unusually high interest rates on a $674 million borrowing deal reached Wednesday — the first since a major debt rating agency lowered Chicago’s creditworthiness to junk status this month.
A Tribune analysis estimated Chicago is paying at least $70 million more to borrow the money than if the city were rated at the higher level it was just 15 months ago.