When it comes to Illinois bonds, Citigroup Inc. says the worst-case-scenario has already been priced in, Bloomberg News reported. The difference between the yields on the state’s debt and top-rated securities — a key measure of risk — widened to a record high in May on speculation that the financial hit from the coronavirus will make it the first state to see its credit rating cut to junk. That selloff pushed its yields to junk-bond levels, surpassing those on some debt issued by still bankrupt Puerto Rico. But Citigroup analysts Vikram Rai, Jack Muller and Vedanta Goenka said in a note to clients Monday that a default like Puerto Rico’s is not a risk since the state has many ways to contend with its tax shortfalls. That includes borrowing from the Federal Reserve’s municipal lending facility, as it did last week. The analysts’ comments reflect greater optimism on Wall Street as much of the nation begins to reopen, even though record unemployment and business shutdowns are leaving governments facing massive budget shortfalls.
