Illinois Earns Credit Upgrade from Moody’s Investor Service

[March 15, 2023]  SPRINGFIELD -- Governor JB Pritzker today hailed Moody’s Investor Service upgrade of Illinois bonds to A3, the second major rating agency to return Illinois’ credit to the ‘A’ category. The action also represents the eighth upgrade in less than two years under Governor Pritzker following eight downgrades under the previous administration.

The continued fiscal progress by the state of Illinois was achieved due to continued strong fiscal leadership by Governor Pritzker and Democrats in the General Assembly.

Moody’s said Illinois’ improving governance was a key consideration in the action. “We consider improving governance to be a key consideration in this action.” Illinois, it said, is “displaying improved management of its budget by making conservative revenue assumptions and applying surplus revenue towards the payment of debt and growth in reserves.”
 

“This credit upgrade, our second one this year, is the result of the steps we’ve taken in Illinois to put ourselves on firm fiscal footing. We have balanced our budget, paid our bills on time, cleared out decades of debt, made extra pension payments, and saved billions for a rainy day,” said Governor JB Pritzker. “There’s more work to be done, but it’s clear we have undone decades of damage and ushered a new era of fiscal responsibility in Illinois. I look forward to building on this record by working with the General Assembly to pass the state’s fifth straight balanced budget later this spring.”

Moody’s Investor Service announced a ratings upgrade to A3 (stable outlook) from Baa1 for Illinois’ General Obligation bonds, its third upgrade of Illinois’ bonds since June 2021. The last time Illinois had an A3 rating from Moody’s was prior to September 2015. Moody’s also upgraded Build Illinois sales tax bonds to A3 (stable outlook) from Baa3 (stable outlook).

S&P Global Ratings announced a ratings upgrade to A- for Illinois’ General Obligation bonds last month, its third upgrade of Illinois’ bonds since July 2021. Fitch Ratings upgraded Illinois’ bonds by two notches last spring, the first Fitch upgrade for Illinois’ General Obligation bonds since June 2000. Illinois received two upgrades from Moody’s Investor Service in two separate actions in April 2022 and June 2021.

The upgrades follow the unveiling of the Governor Pritzker’s proposed fiscal year 2024 budget which builds on four years of historic progress with balanced budgets, a Budget Stabilization Fund on track to hit $2.3 billion, elimination of the state’s bill backlog and reaching $1 trillion GDP. The proposed spending plan maintains the Governor’s commitment to fiscal responsibility while growing Illinois into an economic powerhouse and making transformative, generational investments in education and efforts to fight poverty.

The rating of a state’s bonds is a measure of their credit quality. A higher bond rating generally means the state can borrow at a lower interest rate, saving taxpayers millions of dollars.

Between 2015 and 2017, the State of Illinois suffered eight credit rating downgrades and sat at the top of many analysts’ lists of the worst managed states in the nation. At its worst, Illinois’ bill backlog hit nearly $17 billion.