Ahead of the sale of $1.35 billion of debt on Thursday, Illinois issued an ominous warning to potential bond buyers that it may not have enough money to make its fiscal 2017 pension payments on time.No word yet from Barack Obama on this story.
The nation's fifth-largest state, which is limping through its second consecutive year without a complete budget, said it is possible that its five retirement systems may not receive payments when due because the state's general fund may be low on cash.
"A failure by the state to meet its payment obligations may result in increased investment risk for bondholders," the state said in a supplement to its bond sale prospectus released late on Tuesday.
Illinois already has the lowest credit ratings among the 50 states. A budget impasse, along with a $111 billion unfunded pension liability and a growing pile of unpaid bills, have pounded Illinois' ratings into the low investment-grade level of triple-B.
The supplement said that without full and timely payments, the pension funds may have to sell assets to raise money to cover retirement benefits. That in turn reduces investment returns, driving up the unfunded liability. Illinois owes the pension funds $7.826 billion in fiscal 2017, which ends June 30.
Thursday, October 13, 2016
Posted by Steve Bartin at 9:28 AM