On Thursday, December 12, Illinois sold $350 million of taxable general obligation bonds via auction. This was the first bond sale since the General Assembly passed comprehensive pension reform and according to State Senator Bill Brady (R-Bloomington) the interest rates Illinois got are proof that passing pension reform, while the tough choice, was the right choice.
“Voting for pension reform last week was by no means an easy vote, but today’s bond rates are proof that we made the right decision,” said Brady. “With this latest bond sale our penalty decreased by 29%. That’s huge improvement and good news for Illinois.”
To understand how good the rates Illinois received today are, it is helpful to compare the state’s taxable bond rates to current U.S. Treasury rates. Illinois’ average rate is 2.51 percent higher than today’s 10-year Treasury rate. The state’s bonds sold in the spring were 3.10 percent over the Treasury rate which means that pension reform helped lower Illinois rates by over a half-percent.
“The bond sale isn’t the only positive indicator that passing pension reform is helping to improve Illinois’ financial outlook. Earlier this week Standard & Poor’s changed our bond rating outlook from negative to developing,” said Brady. “It is very possible that, depending on the implementation of pension reform and how we handle the budget, Illinois will see improvement in our bond ratings.”