Illinois is trying to get sovereign wealth funds to buy nearly $4 billion of bonds so the state can pay its annual pension obligations.
John Sinsheimer, the state’s director of capital markets, has been wooing investors investors in Europe and Asia, according to the FT. He said the state is also trying to raise money from big banks and insurance companies in the U.S. before the sale, tentatively scheduled for Feb. 17.
Illinois will likely pay relatively high interest rates on the bonds, due to its persistent fiscal difficulties. Although lawmakers recently passed a steep tax hike to close the budget deficit, Illinois has an unfunded pension liability of about $83 billion. The underfunded pension is now being investigated by the Securities and Exchange Commission.
Borrowing to pay for the pension is a contentious move that could lead to a greater taxpayer burden down the road, the Wall Street Journal reports. It’s another indication that Illinois has still done little to fix its structural debt problems.
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