Illinois credit woes continue: Fitch and Moody’s downgrade
On Oct. 19, credit rating agency Fitch officially downgraded its rating on $26 billion in Illinois general obligation bonds from A- to BBB+, the worst rating of any state in the country. On Oct. 22, Moody’s followed suit, downgrading Illinois bonds from A3 to Baa1. Moody’s had warned earlier in the week that a skipped pension payment planned for November could affect their rating of Illinois’ debt further.
In downgrading the state’s debt, Fitch cited Illinois’ weak economic recovery compared to the rest of the country – long-term liabilities, ongoing budget gaps, and reduced flexibility as a result of the budget impasse. Fitch also lowered the rating from BBB+ to BBB for bonds on the Illinois Sports Facilities Authority, McCormick Place, and Chicago’s motor fuel revenue bonds.
Moody’s also lowered its rating of sales-tax bonds from A3 to Baa1 and lowered the Metropolitan Pier and Exposition Authority and Civics Center bonds from Baa1 to Baa2. Moody’s outlook for Illinois and each additional obligation remains negative.