Moody's

Brian Mackey

A major credit rating agency says Illinois won't see its rating lowered to "junk" but warns the state still faces serious financial challenges and long-term risks.

On Thursday, Moody's Investors Service affirmed the current Illinois rating with a negative outlook, saying a downgrade remains possible in the next two years.

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A major bond-rating agency says the state's fiscal challenges linger despite approval of the first state budget in two years.

Moody's Investors Service issued a report Friday. It notes that an income tax increase approved this month will generate nearly $5 billion more a year.

It says the new revenue will ease the Prairie State's cash crunch. The political squabbling since 2015 between Republican Gov. Bruce Rauner and Democrats who control the General Assembly has contributed to a backlog of bills of nearly $15 billion.

Moody's Downgrades Rockford Bond Rating

Jul 11, 2017
Moody's

Moody’s Investor Service downgraded Rockford’s debt rating from A1 to A2.

The group says the downgrade reflects the city’s high pension burden, as well as greater operating costs and a limited ability to raise revenue. The Rockford Register Star reports city officials say the lack of home rule authority limits the ability to raise such revenue. The lower rating likely will increase overall borrowing costs.

Susan Stephens / WNIJ

Northern Illinois University wasn't alone in the bond-rating downgrades announced Friday afternoon by Moody's Investors Service. The ratings agency also downgraded the University of Illinois, Illinois State, Northeastern, and Southern Illinois University.

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One day after the Illinois General Assembly ended its spring session without passing a budget, two bond-rating agencies have downgraded the state’s credit. The actions by S&P Global Ratings and Moody's Investors Service leave state government debt just one step above “junk” status.

S&P says Illinois is at risk of a negative credit spiral because of what it calls "unrelenting political brinkmanship." This means the agencies think there’s a real possibility state government could run out of cash and default on its debt.

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