61 Comments - Huh? - Thursday, Jun 9, 16 @ 1:30 pm: Yes. Despite the continued problems, I believe that we will survive. - wordslinger - Thursday, Jun 9, 16 @ 1:30 pm: Yes, and have. It’s sad to hear the Illinois comptroller, a supposedly financially savvy and responsible individual, spout such ignorant, negative nonsense. Smart bond buyers love it, though. Drives up the juice. - LizPhairTax - Thursday, Jun 9, 16 @ 1:31 pm: I took Sox at 15/1 to win the 2016 World Series too. I’m dumb with money. - Ole' Nelson - Thursday, Jun 9, 16 @ 1:31 pm: I feel “over-exposed” to investment in Illinois just by owning property in the State. Sooner or later it will be time to pay the piper! - PENSIONS ARE OFF LIMITS - Thursday, Jun 9, 16 @ 1:32 pm: Yes, it’s the only debt that does get paid. - illinois manufacturer - Thursday, Jun 9, 16 @ 1:32 pm: The treasurer is right. Pensions and bondholders are protected. I may buy some because they are a incredible deal in a negative interest world. - Oswego Willy - Thursday, Jun 9, 16 @ 1:33 pm: Like in the movie Casino… Illinois Bonds….. “Get paid first, and get paid best” Absolutely I’d buy Illinois bonds. - JS Mill - Thursday, Jun 9, 16 @ 1:33 pm: returns on the investment are higher thanks to the Governor and his superstars. - Joe M - Thursday, Jun 9, 16 @ 1:35 pm: Yes, because Illinois bond probably yield higher than other such bonds, because of Illinois’ lower ratings. Also, because the state’s constitution ensures that bond holders will be repaid. - burbanite - Thursday, Jun 9, 16 @ 1:37 pm: Did Madigan make her say that? That darn Madigan driving up the bond costs just like he did to CPS! - Valerie F. Leonard - Thursday, Jun 9, 16 @ 1:37 pm: The bonds are backed by the full faith of the Illinois state government; the yields are higher; the state could use a boost in confidence and bondholders will be paid before anyone else. - AC - Thursday, Jun 9, 16 @ 1:38 pm: Yes. The problem isn’t as much the likelihood of default as much as the impact excessive debt has on everything else a government should do. - My button is broke... - Thursday, Jun 9, 16 @ 1:43 pm: I would if the maturity date on the bond was in 10 years or less. Who knows what would happen in 30 years… - Anonymous - Thursday, Jun 9, 16 @ 1:45 pm: Absolutely. By far the best rate I could find on a no risk investment. Illinois many not want to pay its debts but has the ability to do so just not the willpower at the given moment. As they say, crisis creates opportunity and it is my opportunity to get a risk free higher rate. - 47th Ward - Thursday, Jun 9, 16 @ 1:51 pm: ===”it’s a risky proposition to lend to the state right now without a budget”=== Right on cue. Bad mouth the issuer right before going to market. It’s like they are intentionally driving up the cost of borrowing. Why would they do that? - From the 'Dale to HP - Thursday, Jun 9, 16 @ 1:52 pm: Will get paid. But value of the bond is decreasing. So no. - Anonymous - Thursday, Jun 9, 16 @ 1:53 pm: Absolutely…. in my darkest moments I wonder if Rauner isn’t running the state into the ground knowing there is money to be made in their purchase. - Allen D - Thursday, Jun 9, 16 @ 1:53 pm: I just do not prefer bonds no matter what the market climate is. - In a Minute - Thursday, Jun 9, 16 @ 1:54 pm: Less likely after what Congress did with Puerto Rico. Just because the Illinois state constitution says bond payments have priority, all bets are off if someday Congress permits a Chapter 9 like process for Illinois. Some clever lawyering was done on that Puerto Rico legislation. - Oswego Willy - Thursday, Jun 9, 16 @ 1:56 pm: - In a Minute - Interesting take. Has Puerto Rico file Chapter 9? I don’t remember reading that. - Anon221 - Thursday, Jun 9, 16 @ 1:56 pm: Third try, and I’m still a No on this. Here’s a different reason if enable Rauner is off the table. When Enron was going great guns, I got into a pretty heated argument with a financier as to whether or not Enron was manipulating the market. I was soundly told, of course they aren’t, its all about supply and demand. Then, not much later, the “I got grandma” quotes came out, and Enron tanked. I am NOT saying that this is the same situation, but I just don’t like buying into a system that will inflict pain (very high interest rates) on future generations. we would not be at this rating if a certain executive had done his Constitutional duty to begin with. I fear that, in years to come, manipulation will come out, and there will be an even higher price to be paid. (end rant) - Arthur Andersen - Thursday, Jun 9, 16 @ 1:57 pm: Absolutely. Safe, pays well, and good secondary market. - Federalist - Thursday, Jun 9, 16 @ 1:57 pm: Do not like long term bonds- period. Particularly buying them when interest rates area at historic lows. But I would buy them over city bonds even from other states where the cities are in good shape. - RNUG - Thursday, Jun 9, 16 @ 1:59 pm: Heck yes. It’s as close as you can get to a sure thing. - Concerned - Thursday, Jun 9, 16 @ 2:00 pm: No risk of non-payment due to BK, so I would buy those above-average yield bonds. - Angry Bird - Thursday, Jun 9, 16 @ 2:00 pm: When is Illinois going to pay tax refunds? Someone should ask Leslie. - Anon221 - Thursday, Jun 9, 16 @ 2:02 pm: OW- not yet… http://www.usnews.com/news/business/articles/2016-06-09/with-debt-payment-looming-house-weighs-puerto-rico-bill - Just Sayin' - Thursday, Jun 9, 16 @ 2:04 pm: —”Bond debts are paid via continuing appropriations.” So were the legislative salaries, but they now aren’t being paid (even if no authority to do so). So “no” to the question. However, unlike not paying legislators (which probably is someone popular regardless of the constitutionally of it), failure to pay the bonds, and the subsequent further bond grade cuts, would be political suicide. But I wouldn’t take the risk in investment. - Robert the 1st - Thursday, Jun 9, 16 @ 2:04 pm: I’m a little surprised by the results. Most people here were singing a different tune in April. https://capitolfax.com/2016/04/13/bankruptcy-cheerleaders-beware/ - RNUG - Thursday, Jun 9, 16 @ 2:04 pm: Should have qualified above by saying I did lose on Illinois Power / Dynergy stock … so I’m not always right. - Filmmaker Professor - Thursday, Jun 9, 16 @ 2:07 pm: I already did — it’s called SURS, and I’ve invested over $100K. Sure hope I can get it back some day. - Gruntled University Employee - Thursday, Jun 9, 16 @ 2:09 pm: Maybe the State Pension funds could start buying them, at least that way they’re guaranteed some revenue from the state. And while we’re at it maybe the State could start paying their bills with them. - Six Degrees of Separation - Thursday, Jun 9, 16 @ 2:11 pm: Yep - higher yield than many stocks at these prices, and backed by the resources of the state (if full faith and credit mean little to you, think of all the real estate and physical plant the state owns if they ever needed to liquidate). - Oswego Willy - Thursday, Jun 9, 16 @ 2:12 pm: But… They haven’t.. - SAP - Thursday, Jun 9, 16 @ 2:14 pm: Yes. Perceived risk does not equal actual risk. It just ups the yield. - frustrated GOP - Thursday, Jun 9, 16 @ 2:14 pm: So, we can’t declare bankrupcy, the assets of the state and its ability to tax will always exceed its ability to borrow, and its double tax except and a higher rate? Sign me up. Anyone who says no, doesn’t have a clue how this works. Question: Is the Gov. or anyone around him buying? is he creating a market for his buddies? I mean its an artificial market created by panic. That could be consider market manipulation. - AnonymousOne - Thursday, Jun 9, 16 @ 2:15 pm: Anonymous@1:53 =In my darkest moments I wonder if Rauner is running the state into the ground knowing there is money to be made in their purchase= Why would that be in your darkest moments? I thought this was part of his game plan? Who wins with lower bond ratings/costs? Not the average Joe. But the investor types……..money to be made from misery. - In a Minute - Thursday, Jun 9, 16 @ 2:15 pm: Needless to say, its complicated but as I understand it, the Puerto Rico legislation contains a Chapter 9 like process with a stay of litigation by all government bond holders who suffered a default and expressly gives priority to the payment of Puerto Rican government pensions and other non-bondholder creditors over the holders of Puerto Rico bonds. - Oswego Willy - Thursday, Jun 9, 16 @ 2:17 pm: But it’s not…. passed. - frustrated GOP - Thursday, Jun 9, 16 @ 2:17 pm: I would add that if the state can’t pay I have some state highway corners I would like in leu of the bonds and payment. I am sure the toll booth will make up the loss in less then a year. I would be willing to pay tollway a management fee as a % of the take. Or is that a skim? - A Modest Proposal - Thursday, Jun 9, 16 @ 2:18 pm: I said yes. I would buy a bond, for the same reason I would buy a pension - if you could. The constitution. - DuPage - Thursday, Jun 9, 16 @ 2:29 pm: With Rauner and his wing person runnin’ up the rates, I would invest in it. That is if I had any money left to invest after paying the doctor and dentist still waitin’ to get paid by the state. - A Jack - Thursday, Jun 9, 16 @ 2:32 pm: Yes. They pay federally tax free interest. I pay much more in federal taxes than the tiny state income tax that so many cry about. - Keyrock - Thursday, Jun 9, 16 @ 2:32 pm: Yes. The Governor is ensuring rates are high. And President Cullerton will ensure the bonds are paid. - atsuishin - Thursday, Jun 9, 16 @ 2:36 pm: Yes would buy a bond. The risk default is very limited, illinois state has sovereignty taxing power to pay its debts. If other taxing districts are in distress they can legislate those district go bankrupt pay those debts and ensure the illinois tax increase are the priority. Rauner will eventually be forced into a huge tax increase with some nominal “reform.” I expect Trump wipe out will ruin the GOP, tighten Madigan’s grip over the state. I would hate to be a illinois taypaper but would jump at the chance to buy illinois bonds. - Cook County Commoner - Thursday, Jun 9, 16 @ 2:43 pm: I voted “No.” I see no resolution in the near future to the Illinois’ state and local government fiscal distress. Accordingly, downgrades will continue and yield will rise as bond prices drop. I may look at select Illinois paper in a year or so if prices bottom and yields peak. - Say It Ain't So!!! - Thursday, Jun 9, 16 @ 2:44 pm: Follow the money… Higher interest returns mean more money for investors like Bruce Rauner and Kenneth Griffin. - Anon - Thursday, Jun 9, 16 @ 2:51 pm: General revenue bonds from a state are incredibly safe. If I had hundreds of thousands of dollars to throw into the bond market, I’d throw it into Illinois where I would have the highest rate of return. Even if the state defaulted, there’s still certainty of getting paid. - The Muse - Thursday, Jun 9, 16 @ 2:57 pm: Absolutely! That state is going to be good for the money and you’ll make more denaro in the long run. - Jilly - Thursday, Jun 9, 16 @ 2:58 pm: Investing even one penny in Illinois is foolish when there are plenty of other places to invest. - Anonymous - Thursday, Jun 9, 16 @ 3:29 pm: Yes. Legally paid first in a crisis. As safe as you’ll find. - Former Bartender - Thursday, Jun 9, 16 @ 3:44 pm: Yes. The State has no mechanism for bankruptcy on this debt and the bonds are on the top of the legal waterfall of payment. You will be paid and you’ll get a nice spread on top of other similar debt. - Diogenes in DuPage - Thursday, Jun 9, 16 @ 3:55 pm: Absolutely. And as the ratings go down, the interest rates will go up. Buy, buy, buy. Thanks, Governor “Winnin”" - Hit or Miss - Thursday, Jun 9, 16 @ 4:35 pm: Yes. The bonds will be paid even if payments to all social service providers go unpaid. Bond holders have a sure thing, others who count on the state do not. - Cheryl44 - Thursday, Jun 9, 16 @ 5:16 pm: I work for a place that’s named for a couple who gave this university enough money it named this place after them. They made their money buying up things people had for sale in the Great Depression. A building here, a company there, all sold for far less than their eventual worth. So yeah, state bonds seem to me to be a pretty good investment right now. - Oswego Willy - Thursday, Jun 9, 16 @ 5:34 pm: US House Passes Puerto Rico Bill… We’ll see how it goes in the US Senate… - Molly Maguire - Thursday, Jun 9, 16 @ 5:50 pm: Munger trying to be too slick, but was called out on it, then had to walk it back. She’s trying to cloak her loyalties to the Governor, and I don’t like the look. As far as buying the bonds, that’s a no brainer–for the right interest rate to compensate you for the risk, yes. That’s why they will fly off the shelf. - Enviro - Thursday, Jun 9, 16 @ 6:49 pm: Illinois bonds have a good return on investment. Bond holders and state pensions are paid before others. States can’t declare bankruptcy. - Rabid - Thursday, Jun 9, 16 @ 7:02 pm: The glare on the poster looks like “Illinois budget not line”. What fun call “br 555 ask me” sound like afscme (clever) is this the number to report corruption? - lost in the weeds - Thursday, Jun 9, 16 @ 7:45 pm: This is one of the best investments with its relatively high yield. Especially if one is in a high tax bracket since the income is federal income tax free. I should qualify as there are other factors that might be affected if one also gets social security for instance, where the muni income counts in the formula causing higher taxes. Only state to default on a bond was Arkansas during the great depression. - Tom K. - Thursday, Jun 9, 16 @ 9:05 pm: I voted “yes”, but wouldn’t bet the farm on one. It’s not as solid as purchasing a U.S. Treasury, since the state can’t print its own money, a court may step in when we get to SHTF territory, and I’m not convinced Congress wouldn’t prefer to allow state bankruptcies vs. bailing one out. But, all in all, I agree with most of the posters here, it is a very safe investment. Which begs the question, why exactly is there such a high premium on GO bonds, if they’re so safe? If we only had a Governor with a business background, I would think he’d find a way for the state to peddle its bonds itself, and price them with an attractive-but-much-smaller-than-current premium, and test the market, much the same way the U.S Treasury does with savings bonds. If they fly, then create a plan to refinance ALL state debt with GO’s in this historically-low rate environment, and save the state a whole bunch of scratch in the process. If that’s illegal, then change the law. Can’t our leaders at least agree on reducing the spread of our debt? Or is that too simplistic? Sorry, comments for this post are now closed.