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Moody’s downgrades Illinois bond rating

Illinois capitol
Illinois Capitol

Moody's Investors Service downgraded Illinois' general obligation bond rating to Baa1 on Thursday over concerns the state's budget impasse could further weaken its financial position.

The state has been operating without a budget since the fiscal year began July 1.

In its ratings report, Moody's also acknowledged the state's severe pension problems.

Illinois' five state defined benefit plans' liabilities totaled $111.2 billion, with a funding ratio of 39.3% as of June 30, 2014, the worst of any state in the country.

Continued growth in unfunded pension liabilities could lead to further downgrades, Moody's said.

State Comptroller Leslie Geissler Munger announced Oct. 14 that the state will delay its November pension contribution as a result of the budget stalemate.

Moody's outlook for Illinois is negative.

On Monday, Fitch Ratings downgraded Illinois to BBB+ from A-, also citing concerns over the state's budget impasses.