After Pension Reform Signed, S&P Improves Illinois' Rating Outlook
Standard & Poor's Ratings Services on Tuesday revised the outlook on Illinois' A-minus credit rating to developing from negative due to the state's passage of long-awaited pension reform last week.
The credit ratings agency said the revision to developing, an unusual outlook designation for a state, indicates that Illinois' rating could be raised or lowered during a two-year horizon.
“Although we view the consensus achieved by Illinois on this difficult issue as positive from a credit standpoint, the developing outlook reflects the implementation risk - legal and budgetary - associated with various provisions of the pension reform as well as the overall structural budget challenges facing the state,” S&P analyst Robin Prunty said in a statement.
Illinois' sweeping reforms to its public retirement system, which were signed into law by Governor Pat Quinn on Thursday, are aimed at easing a $100 billion unfunded pension liability that has been squeezing out funding for core state services.