In the latest installment of Muni Minute – The Bond Buyer's 60-second video series that examines a top municipal market story that will impact the coming week – we take a look at Illinois, a state battered by political infighting which has caused a budget impasse that has sparked credit rating downgrades. All this unfolds as the state prepares to enter the market with a $550 million competitive bond sale on Thursday.

VOICE OVER: The political divide in Illinois is taking a toll on its battered credit, ratings that are already the lowest of any state in the nation. As Illinois heads toward a second fiscal year without a budget, there’s no end in sight to the bitter split between Republican Governor Bruce Rauner and the General Assembly’s Democratic majority. The impasse has driven munis to cut the state to BAA2, two notches above junk bond status while S&P stripped Illinois of it's only A level rating when it cut the state to BBB+.

Fitch kept Illinois at BBB+ but put it on the negative review. All assigned negative outlooks, putting the state at risk of triggering swap terminations, and on Thursday, Illinois will learn the true cost of political inaction in dollars, when it takes bids on $550 million of general obligation bonds. Market participants say, “Overall strong demand for muni paper and a hunger for extra yield will keep the state’s premium at bay.” But at least one investor, Blackrock, suggested that shouldn’t be the case, and that perhaps it’s time the buy side reconsider the state’s market access. Stay tuned on Thursday. I'm Chip Burnett. This has been your Muni Minute.