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Illinois Spreads Widen

October 13, 2016

Illinois' yield penalties widened Thursday as the nation's lowest-rated state sold $1.3 billion of general obligation refunding bonds against a tide of negative fiscal and market headwinds.The state's negative fiscal headlines of late combined with the deal's size, limited maturities that extended out only to 2032, and a weaker market with lots of supply drove the uptick in spreads compared to trading levels over the last month, said Brian Battle, director of trading at Performance Trust Capital Partners."There were a lot of bonds in a small number of maturities," which narrowed the investor base as some funds otherwise interested in the state's paper looked for higher-yielding maturities on the long end, Battle said, adding that it's hard to know how much any one factor drove the upswing in spreads. "I think it's everything together."

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