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The Bond Buyer reports:
With a water revenue deal pricing Wednesday and a pending general obligation deal, Chicago has stepped up its investor-relation efforts as it seeks to minimize the premium demanded by buyers of paper from Illinois-based borrowers due to the state’s liquidity and budget crisis.
What's going on ?:
The “Illinois penalty” or “Illinois effect” adds a premium of around 50 basis points to a long bond’s yield. The impact is lower for higher rated credits and higher for those with more exposure to the state’s budget and liquidity crisis.
Ouch.
