Investors are looking warily at another plan by another Illinois Democratic administration to sell bonds to cover the state’s staggering debts,
The New York Times reports.
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| Ill. Gov. Pat Quinn |
The last Illinois bond sale, a trickier venture that tied repayment promises to assumptions about investment returns, actually pushed the state’s pension fund deeper into the red. It also led, through a chain of bond-related influence-peddling, to the indictment of then-Gov. Rod Blagojevich.
State officials say it’s different this time.
“We are financing these payments by borrowing. Period. There is no attempt at arbitrage,” said Gov. Pat Quinn’s top investments officer, John Sinsheimer.
A more skeptical investment climate for municipal bonds — coupled with tougher federal scrutiny of how states portray their fiscal health — has forced Illinois into being unusually candid about the dismal state of its finances. Buyers ultimately are expected to line up, and the bond issue has high-powered underwriters in Morgan Stanley and Goldman Sachs.
But experts who have read the prospectus are shuddering at some of the numbers, and still others question whether Illinois has done its accounting under accepted industry standards.
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