Illinois notches 5th credit rating boost in a year

Wall Street credit rating agency Fitch Ratings upgraded its Illinois bond rating two notches on Thursday, the fifth upgrade credit agencies have given the state in less than a year.

Fitch upgraded the state’s rating on its general obligation bonds to BBB+ from BBB- and its sales tax bonds to A from BBB+. The upgrade comes as Gov. J.B. Pritzker, who is running for reelection, hopes to prove to voters that the state is in better fiscal shape under his leadership.

“The upgrade to ‘BBB+’ reflects fundamental improvements in Illinois’ fiscal resilience including full unwinding of pandemic-era and certain pre-pandemic non-recurring fiscal measures, meaningful contributions to reserves and sustained evidence of more normal fiscal decision-making,” Fitch said in its rating upgrade, noting the state’s economy is slowly growing “but still provides a strong fundamental context for its credit profile.”

“Balanced budgets four years in a row, paying the state’s bills on time, early repayment of pandemic-related borrowing, clearing out debts left by previous administrations, making higher-than-required pension payments, setting aside $1 billion in savings for a rainy day — this is what responsible fiscal management looks like,” Pritzker said in a statement on Thursday.

Fitch, which hadn’t upgraded its rating on the state since June 2000, noted the state’s economic recovery is picking up but still trails the national rate. Through March 2022, data showed the state had recovered 82% of the jobs lost at the start of the pandemic versus the national rate of 93%. The state’s official March monthly unemployment rate of 4.7% was higher than the national 3.8% rate that month.

But the state has gained jobs faster than the national rate within the past six months, up more than 18 percentage points versus 16 percentage points nationally.