S&P Global Ratings has joined two other top credit rating agencies in once again boosting Illinois’ bond rating.
The S&P’s upgrade of the state’s rating to BBB+ earlier this month mirrored similar boosts by Moody’s Investor Service and Fitch Ratings and once again signaled the reversal of a 10-year decline in Illinois’ creditworthiness.
The credit rating agencies assign grades to each state based on its government’s ability to pay its debts and the general health of that individual state’s economy. A higher bond rating also generally means the state can borrow at a lower interest rate, potentially saving taxpayers millions of dollars.
According to Gov. J.B. Pritzker, that means that Illinois now has received two-notch bond rating upgrades from the three major credit rating agencies in the past year, or a total of six upgrades in less than a year.
Contrast that with the period between 2015-2017 when Illinois saw eight credit rating downgrades and faced a $17 billion backlog of unpaid bills. Not surprisingly, Illinois frequently was listed by industry analysts as one of the worst managed states in the nation.
“After more than 20 years without receiving a credit upgrade, the rating agencies are taking notice of our tremendous progress,” Mr. Pritzker said in a recent news release following S&P’s latest upgrade. “Along with our partners in the General Assembly and my fellow constitutional officers, we will continue to build on our success and lead this state in a fiscally responsible manner.”
According to S&P Global’s latest analysis, “The upgrade reflects what we view as improvement in the state’s financial flexibility and monthly revenue reporting transparency, continued timely budget adoption and elimination of the bill backlog, as well as recent surplus revenues being used to promote what we view as longer-term financial stability, although credit pressures remain.”
S&P last upgraded the state’s bonds in July 2021, and the latest analysis credited stronger-than-forecast tax revenues and transparent reporting both from the Comptroller and the Governor’s Office of Management and Budget aiding in addressing long standing credit weaknesses.
Fitch Ratings also upgraded Illinois’ bonds by two notches in May. That was the first Fitch upgrade for Illinois’ General Obligation bonds since June 2000, the governor’s office said. Illinois received an upgrade from Moody’s Investor Service in April, the second such upgrade by Moody’s in 10 months.
The upgrades also follow the enactment of the state’s fourth balanced budget in a row, and marked Illinois’ first contribution to a Rainy-Day Fund in 18 years, as well as a $500 million extra payment toward the state’s pensions, the governor said.
