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Moody's Downgrades Rating On $26.8B In Illinois Bonds

Flickr user Pictures of Money / "Money" (CC BY 2.0)
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The Moody's credit rating agency has downgraded $26.8 billion in Illinois's general obligation bonds, saying the move was due to the state's weakening financial position during the year.

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Credit Flickr user Pictures of Money / "Money" (CC BY 2.0)
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In lowering the bond rating to Baa1 from A3 on Thursday, Moody's Investors Service said its expectation is that the ongoing stalemate on the budget due July 1 will lead to further deterioration of the state's finances.

Fitch Ratings on Monday downgraded its rating on the state's outstanding bonds for the same reason.

The lower a state's credit rating, the tougher, and more expensive, it is to borrow money.

In its announcement, Moody's said Illinois' structural budget imbalance, accounts payable, and other obligations "are back-tracking, despite a favorable economic climate, leaving the state more vulnerable to the next economic downturn,'' barring swift corrective actions.

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