Fitch: "Illinois will be challenged to maintain its investment-grade" status

Fitch Ratings has downgraded the state of Illinois’ Issuer Default Rating (IDR) to ‘BBB-’ from ‘BBB’. Additionally, Fitch has downgraded the following ratings which are linked to or capped by the state’s IDR:

–GO bonds, downgraded to ‘BBB-’ from ‘BBB’;

–Build Illinois senior and junior obligation sales tax revenue bonds, which are linked to the state’s IDR based on state-dedicated tax analysis, downgraded to ‘BBB+’ from ‘A-’;

–Metropolitan Pier and Exposition Authority (MPEA) expansion project bonds, which are capped at appropriation risk of the state, downgraded to ‘BB+’ from ‘BBB-’;

–Illinois Sports Facilities Authority (ISFA) sports facilities (state tax-supported) bonds, which are also capped at appropriation risk of the state, downgraded to ‘BB+’ from ‘BBB-’.

The Rating Outlook is revised to Negative from Stable.

Fitch anticipates reviewing ratings within the next two weeks for Chicago motor fuel tax revenue bonds (BBB-/Stable) that may be affected by the downgrade and Outlook revision. […]

ANALYTICAL CONCLUSION

The downgrade of Illinois’ IDR and GO bond ratings to ‘BBB-’ from ‘BBB’ reflects Fitch’s anticipation of a fundamental weakening of the state’s financial resilience given its already tenuous position entering the current severe downturn. While Illinois should avoid any immediate cash flow pressures, the state’s lack of meaningful reserves and the limited nature of other fiscal-management tools at its disposal mean Illinois will be challenged to maintain its investment-grade IDR.

Read more: https://capitolfax.com/2020/04/16/fitch-illinois-will-be-challenged-to-maintain-its-investment-grade-status/