SZALINSKI’S SUMMARY: S&P Global Ratings upgraded Illinois’ general obligation debt to an “A” rating on Tuesday and said the state’s credit outlook is “stable.” The Wall Street firm’s first upgrade since February 2023 follows a similar increase last week by Moody’s and marks the 12th overall upgrade since Gov. JB Pritzker took office.
WHY IT MATTERS: Credit upgrades are good news for the state’s finances. A higher credit rating shows bond investors have more confidence in Illinois, which means the state can borrow money at lower interest rates and ultimately save taxpayers money.
S&P Global also raised ratings for moral obligation-supported debt to BBB, Build Illinois bonds to A+ and Metropolitan Pier and Exposition Authority bonds to A+.
WISH GRANTED: Pritzker was hoping for another upgrade just last week after receiving a positive review from Moody’s. It turns out rubbing the nose of the bronze bust of Abraham Lincoln outside his Springfield gravesite does bring good luck.
“I just rubbed Lincoln’s nose,” Pritzker said in an interview with Capitol News Illinois at Oak Ridge Cemetery last week. “I can tell you I was praying for a 12th upgrade.”
The credit upgrades are among Pritzker’s proudest achievements as the state has risen above borderline junk status from when he took office and reversed a trend of about two dozen consecutive downgrades. Earning two upgrades with Election Day two months away gives Pritzker more bragging rights on the campaign trail.
WHY IT HAPPENED: “The outlook also reflects our view of the state’s recent history of conservative budgeting and proactive management of the fiscal gap during consecutive budget cycles,” S&P’s report said.
The report also said they believe the state can withstand financial challenges posed by federal changes to the Supplemental Nutrition Assistance Program and Medicaid funding, so long as state lawmakers respond in a timely fashion “without sacrificing recent fiscal gains.” S&P said Illinois’ rating could be lowered, however, if revenue weakens and lawmakers don’t proactively tackle budget pressures.
More upgrades could happen, S&P said, if Illinois makes progression on paying down unfunded pension liabilities and finds new revenue sources.
BAD NEWS: Even with the upgrade, Illinois still has the worst rating from S&P Global in the country. The same can also be said for Moody’s ratings. The state is one spot behind New Jersey, Kentucky and Pennsylvania on S&P Global’s scale. But it also shows just how far Illinois has come in the past decade since the state’s rating was five places lower at BBB-, which is one level above junk.
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Darren Bailey, Pritzker’s Republican opponent, agreed the upgrade is good news, but said the state’s overall ranking shows there’s still a lot of work left to improve the state’s finances.
“A credit rating tells Wall Street whether Illinois government can afford to pay its bills. It doesn’t tell you whether you can afford yours,” Bailey said in a statement. “So yes, I’m glad Illinois can borrow money cheaper. Now let’s make Illinois cheaper to live in.”
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