Illinois, which has faced escalating penalties in the bond market as the coronavirus batters its finances, is poised to become the first state to borrow from the Federal Reserve’s $500 billion lifeline for local governments.
The state is planning to borrow $1.2 billion from the central bank for one-year to cope with revenue losses brought on by the economic shutdowns caused by the pandemic and the delay of its annual tax-filing deadline.
The step comes after Illinois last month put off a planned auction of such short-term debt as the interest rates demanded by investors soared amid concern it could be the first state to have its bonds cut to junk. The deal was put on day-to-day status, and now the state is instead turning to the Fed. The central bank will charge an interest rate of 3.82%, more than a full percentage point less than it paid during a bond sale last month.
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The state's finances are in such shambles, and the Democrat-controlled state legislature, executive and judicial branches are not willing to consider budget reform, ethics reform or change any of its ways. Instead, the direction and the speed seem to accelerate.
Leading to being considered the third worst state in the union in which to do business by the Chief Executive – only New York and California are worse –
And here's the five best states for business – including Illinois' neighbor to the east, Indiana.