Illinois officials say this week’s bond sale went better than expected, but traders say the state is still paying a higher interest rate than any other state in the country.
Illinois bonds are rated the worst in the country by Moody’s – reflecting the state’s inability to pay its bills and its big pension shortfall.
But that didn’t stop investors from snapping up $3.7 billion worth of bonds yesterday.
John Sinsheimer is director of capital markets for Illinois. He says investors were reassured by the state’s recent income tax hike, but that’s not enough.
"Their concerns were really focused on can we keep the momentum that we’ve got right now, can we keep that going forward and of course we believe that we can," Sinsheimer said.
Sinsheimer says the bonds will pay on average almost three percentage points more than equivalent U.S. Treasury bonds. He says it’s a little better than Illinois officials expected just a few weeks ago.