Illinois credit rating upgraded two notches by Fitch Ratings by Governor JB Pritzker


Fitch Ratings, one of the big three credit rating agencies in the United States, raised Illinois’ bond rating two notches, Illinois’ fifth notch in less than a year.

Fitch’s upgrade is the first for Illinois GO bonds since June 2000 and follows an upgrade by Moody’s Investor Service, another of the Big Three rating agencies, last month, the second upgrade level of this type by Moody’s in 10 months.

“The upgrade to ‘BBB+’ reflects fundamental improvements in Illinois’ fiscal resilience, including the full pandemic-era unwind and some pre-pandemic one-time tax measures, meaningful reserve contributions and enduring evidence of more normal fiscal decision-making,” the Fitch Ratings statement said, noting a steady reduction in accounts payable and the repayment of many lingering government debts.

Fitch raised Illinois’ rating on its general bonds to BBB+ (stable outlook) from BBB- (positive outlook), and also raised Build Illinois’ sales tax bonds to A (stable outlook) from BBB+ ( positive outlook). This follows Moody’s upgrading Illinois’ general bond rating to Baa1 stable outlook from Baa2 stable outlook and also upgrading Build Illinois sales tax bonds to Baa1 from Baa2 while maintaining a stable outlook.

Government bonds are used to assess the measure of their credit quality. A higher bond rating generally means the government can borrow at a lower interest rate, which can save taxpayers money.

In its rating action, Moody’s credited the “solid growth in state tax revenue over the past year,” which has increased the state’s ability to rebuild its financial reserves and increase payments for unfunded liabilities Moody’s noted Illinois’ progress in paying down its debt and increasing its pension contributions as an indication of the state’s increased commitment to paying its pension debt.

The upgrade follows the enactment of the state’s budget plan to provide $1.8 billion in tax relief to Illinois residents and the first contribution to Illinois’ Rainy-Day Fund in 18 years, with an additional $500 million for state pensions.

“Balancing budgets four years in a row, paying government bills on time, paying off pandemic-related loans early, settling debts left over from previous administrations, paying more pensions than needed, setting aside $1 billion in savings for a rainy day – that’s what responsible fiscal management looks like,” Illinois Governor JB Pritzker said in a statement. “We’ve transformed Illinois from a deadbeat state to a fiscally responsible state that attracts businesses from around the world.”

Illinois suffered eight credit rating downgrades from 2015 to 2017 and was among the worst-run states in the nation, with a bill backlog of nearly $17 billion at one point, the administration wrote. Pritzker in a press release.

Source link


Comments are closed.