S&P Global Ratings said it affirmed its BBB-minus rating on Illinois' general obligation bonds, and the BB-plus ratings on the state's appropriation-backed debt, which includes Chicago's outstanding motor fuel tax (MFT) revenue bonds.
It also affirmed its BB-minus ratings on the state's moral obligation-backed debt.
The ratings were removed from CreditWatch, where they had been placed with negative implications on June 1, because the agency no longer believes the state is at risk of experiencing a liquidity crisis in the near term.
The rating affirmations and stable outlook reflect that following Illinois' enactment of a fiscal 2018 budget, which required a bipartisan vote of the General Assembly to override the governor's veto, the odds of its GO credit rating falling to below investment grade within the next year has substantially diminished, S&P said.
Illinois' protracted budget impasse came to represent an extraordinary threat to its credit quality, S&P said. Through a combination of spending cuts and tax increases, the budget package brings the state's revenue and expenditure base much closer to structural alignment and reduces the near-term uncertainty that had come to characterize its financial operations, according to the agency.
Crucially, budget enactment also reasserts state authority over its finances while simultaneously helping preserve and strengthen the adequacy of its resources to reliably cover its priority obligations, S&P said.