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updated: 1/31/2013 4:11 PM

Bond sale scuttled because of downgrades

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Associated Press

SPRINGFIELD -- Illinois officials have delayed borrowing $500 million for construction projects because the pension crisis makes the state's debt more expensive.

Abdon Pallasch, a spokesman for Gov. Pat Quinn's budget office, said a bond sale scheduled for Wednesday was postponed after potential bidders warned of an "unsettled" market.

Blame the ongoing quandary over how to reduce a $96 billion deficit in Illinois public-employee pension accounts. Standard & Poor's is the latest credit agency to downgrade the state's credit worthiness because of the pension mess.

S & P also gave Illinois a "negative" outlook -- reflecting the legislature's "poor track record" on solving the pension-liability problem.

Pallasch said the bond sale will be rescheduled after markets review the situation. The bond sale was to fund school and transit projects.

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