CHICAGO — Illinois has postponed its $3.7 billion taxable general obligation bond sale scheduled for Thursday until next week to give investors time to digest Gov. Pat Quinn’s budget proposal Wednesday.

The new date is still undecided, state officials said Tuesday.

“We are receiving a great deal of international interest on these bonds,” Quinn spokesman Kelly Kraft said in an e-mailed statement Tuesday. “It is only appropriate to give investors time to digest the governor’s budget speech.”

The deal was to be the largest in an otherwise light primary market this week. The state decided to postpone the offering late Monday.

Morgan Stanley is the senior manager. The bonds, which will mature from 2011 to 2019, are rated A1 by Moody’s Investors Service, A-plus by Standard & Poor’s, and A by Fitch Ratings.

The state will use the proceeds to cover its fiscal 2011 pension-fund payments.

In his budget address, Quinn, a Democrat, is expected to warn that the state’s recent move to increase income taxes by 66% did little to solve Illinois’ fiscal problems, which include a deficit that could be as high as $15 billion by the end of fiscal 2011.

Officials are keeping mum about Quinn’s budget proposal but it is expected to feature deep cuts and a renewed call to borrow $8.75 billion through bonds to pay off a backlog of bills.

The proposal calls for the issuance of 14-year debt backed by revenue from the new income-tax increase.

But a group of Illinois Senate Republicans Tuesday warned Quinn to leave that borrowing plan out of his budget address. The GOP leaders held a press conference in Springfield where they vowed to block the bonding plan.

Senate Minority Leader Christine Radogno, a Republican from Lamont, told reporters that Quinn should leave the borrowing plan out of his budget speech.

“We know this plan doesn’t have support in the House and it doesn’t have support in the Senate,” Radogno said at the press conference.

Republican votes are needed in both chambers to pass the measure, as a three-fifths super-majority is needed for debt sales.

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.