This article was published by the McAlvany Intelligence Advisor on Friday, June 30, 2017:
The Journal declared that although the state of Illinois “is in deep trouble”, that shouldn’t be troubling to those investors holding billions of the state’s debt that is about to be downgraded to junk. On Saturday morning, barring a miracle, S&P Global will keep its promise and announce that Illinois’s debt rating is being reduced by at least one more notch, to junk status.
The Journal said that downgrade reflects the fact that the state faces “large uncertainties” and has “major exposure to adverse conditions.” But none of those need bother investors, said the Journal. Even though several bond mutual funds have bailed since the first of the year, offloading an estimated $2 billion of the state’s $25 billion in investor-owned debt, the Vanguard Group is standing firm. It has the largest exposure to Illinois in its seven mutual funds, holding $1.2 billion of its debt and claiming that it is “comfortable with (its) risk/reward”.