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Illinois Bond Sale Better Than Expected

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The state of Illinois, facing a $4.7 billion backlog of unpaid bills, today sold $900 million in federally subsidized taxable Build America Bonds at a spread to Treasuries that was better than estimates. Expectations were that the state would pay 330-340 basis points above 30-year Treasury bonds, but the actual sale came in at 325 basis points. A basis point is 0.01 percentage point.

Still, the average yield on Build America Bond debt is about 199 basis points, according to Bloomberg.

Without the borrowing Illinois would be forced to cut some of the most basic services provided, in addition to finding way to reduce the state's pension-funding deficit, the worst in the nation at $3.7 billion.
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