Illinois to sell USD350 million in general obligation bonds after pension reform bill vote
The State of Illinois plans to offer USD350 million in general-obligation bonds in a competitive sale on December 12, Illinois capital markets director John Sinsheimer said.
According to a report by Bloomberg, the deal will be Illinois' first general-obligation offering since June.
The Democrat-dominated General Assembly is set to consider a solution to the nation's worst-funded US public pension system, the report said. In another report, Reuters said that Illinois legislators will be voting on a pension reform bill aimed at saving an estimated USD160 billion over 30 years.
Bloomberg said that Sinsheimer declined to comment on the pension measure's impact on borrowing costs. Sinsheimer, however, said the longest-dated bonds would mature in 25 years.
The extra yield investors demanding to own Illinois' bonds instead of AAA-rated minicipal bonds is the highest among 17 states, the report said.
Investopedia defines general obligation bonds as those issued with the belief that a municipality will be able to repay its debt obligation through taxation or revenue from projects.
Meanwhile, AAA-rated municipal bonds are perceived to have little risk of default and offer investors low yields among bonds of comparable maturity, according to Investopedia.