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* I told subscribers about this early today. The state was hit with a negative CreditWatch by S&P yesterday just after it withdrew a $1.4 billion short-term bond offer, which was supposed to be priced yesterday afternoon…
Illinois began to feel the financial fallout of Gov. Rod Blagojevich’s corruption scandal after Standard & Poor’s cited it in its decision to put the state’s credit on negative CreditWatch and finance officials delayed a $1.4 billion cash-flow issue yesterday as they awaited final approval of the transaction documents from some state officials.
“The CreditWatch placement reflects our opinion of the state’s growing budgetary shortfall, now projected at $2 billion for the current fiscal year, and our concern that the legal charges now facing the governor and his chief of staff may challenge the state to respond to this fiscal situation on a timely basis,” Standard & Poor’s analyst John Kenward wrote in a report issued late Wednesday on the state’s AA credit. […]
Standard & Poor’s yesterday updated its report - issued in conjunction with the agency’s review of the $1.4 billion general obligation certificates sale - after it learned the state had postponed the sale to Tuesday, Dec. 16 from its scheduled issue date yesterday.
Attorney General Lisa Madigan is looking at legal issues, specifically boilerplate bond certificate language which requires Madigan to certify there is “no pending or threatened litigation or any controversy that questions the governor’s ability to hold his office.”
Obviously, she can’t do that, so they’re working on alternatives.
Market participants on short-term desks said there appeared to be solid demand for the notes, but any delay could hurt as investors move to close their books on the year. Ice Miller LLP is bond counsel.
* Context…
The borrowing, which was postponed to Tuesday, would have helped alleviate a 12-week delay in payments to hospitals, doctors, social service agencies and other state contractors.
* More bad news…
Bonds Fall
Illinois 5 percent bonds due in January 2010 were sold to a customer today at 102.345 cents on the dollar to yield 2.70 percent, almost 0.3 cents less in price and 20 basis points more in yield than a similar trade Dec. 2, according to data reported to the Municipal Securities Rulemaking Board. A basis point is 0.01 percentage point.
posted by Rich Miller
Friday, Dec 12, 08 @ 2:05 pm
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===Attorney General Lisa Madigan is looking at legal issues, specifically boilerplate bond certificate language which requires Madigan to certify there is no “pending or threatened litigation or any controversy that questions the governor’s ability to hold his office.”===
Is there any question on the legitimacy of the AG’s request to the Supreme Court? This is a clear, objective reason for allowing LG Quinn to assume the Gov’s duties.
Comment by Pot calling kettle Friday, Dec 12, 08 @ 2:13 pm
This situation is wreaking havoc on local governments. The State has suspended payments of the local share of the State income tax until the bond issue is resolved. Individual municipalities are each waiting to receive hundreds of thousands of dollars. This is a big deal, especially for those communities that are already just scraping by because of poor performing local economies.
Comment by GA Watcher Friday, Dec 12, 08 @ 2:44 pm
This entire mess is almost like watching the Twin Towers collapse. How could one individual reek so much havic?
Comment by Dan S, a Voter and Cubs Fan Friday, Dec 12, 08 @ 3:04 pm
This situation is also putting huge amounts of pressure on service providers who continue to provide much needed services. These providers aren’t getting paid and many are stuggling to keep the doors open. This comes as demand for these service are increasing due to the worsening economy.
Comment by Country Boy Friday, Dec 12, 08 @ 3:05 pm
Thanks Rod for $crewing the great $tate of Illinoi$ and all u$ people that you allegedly worked $o hard for.
Comment by Concerned Voter Friday, Dec 12, 08 @ 3:35 pm
How could one individual reek so much havic?
Wreak so much havoc (sp)
My first response got banned, so I’ll try again.
No one gets as far as he did without lots of help (including the affirmation of the electorate TWICE), and without “good” people aiding abetting his operation by their silence or weak opposition.
Comment by Six Degrees of Separation Friday, Dec 12, 08 @ 4:14 pm