By PETER HANCOCK
Capitol News Illinois
phancock@capitolnewsillinois.com

SPRINGFIELD – Moody’s Investors Service announced Tuesday that it has upgraded Illinois’ bond rating to A3, up from Baa1, marking the eighth credit upgrade the state has received in less than two years.

Moody’s is now the second major rating agency to put Illinois in the ‘A’ category following S&P’s decision on Feb. 23 to upgrade the state to A- on its scale.

“This credit upgrade, our second one this year, is the result of the steps we’ve taken in Illinois to put ourselves on firm fiscal footing,” Gov. JB Pritzker said in a statement. “We have balanced our budget, paid our bills on time, cleared out decades of debt, made extra pension payments, and saved billions for a rainy day.”

In its announcement, Moody’s cited the state’s “improving governance” as a key factor in its decision. Moody’s is one of many firms that now assesses companies and governments on an “environmental, social and governance,” or ESG, framework.

The rating agency said it had updated the state’s “issuer profile score” in the governance category to 2 from 3.

“Like other states, Illinois enjoyed solid tax revenue growth over the past couple years, expanding its capacity to build financial reserves and increase payments towards outstanding liabilities,” Moody’s said in its announcement. “The state is on track to close fiscal 2023, which ends June 30, with further growth in reserves that are already at their strongest level in over a decade.”

Illinois’ “rainy day” fund is slated to reach its highest-ever balance of more than $1.9 billion by the end of the fiscal year.

The new rating applies to the state’s general obligation, or GO, bonds and its Build Illinois sales tax bonds. Illinois currently has approximately $26 billion in outstanding GO bonds and $2 billion in outstanding sales tax bonds.

Moody’s also rated the state’s financial outlook as “stable,” saying that such an outlook “balances the financial progress being made by the state with the uncertainty of the present economic climate.”

“The state’s lean financial reserves and heavy long-term liability and fixed cost burdens make it more vulnerable than other states to a negative shift in the national or global economy,” it said.

Capitol News Illinois is a nonprofit, nonpartisan news service covering state government. It is distributed to more than 400 newspapers statewide, as well as hundreds of radio and TV stations. It is funded primarily by the Illinois Press Foundation and the Robert R. McCormick Foundation.