Illinois Receives Rating Upgrade to A1 From A2 From Moody's

By Stephen Nakrosis

Moody's Ratings upgraded its rating for the state of Illinois to A1 rating from A2, the first time since June 2010 it reached that level.

The upgrade to Illinois's rating reflects continued improvement in the state's financial metrics, Moody's said. The state has delivered eight consecutive on-time balanced budgets and shown consistently conservative fiscal management, the agency added.

Further, Illinois's large and highly diversified economy supports the rating, according to Moody's.

As a limiting factor for the rating, Moody's said Illinois is experiencing high leverage and fixed costs, driven by large unfunded pension liabilities. The state also has constitutional provisions protecting post-employment benefits and prohibiting certain changes in tax structure, the agency said.

In October 2015, Moody's had the state rated at Baa1, two notches above junk status. Since then, the state's ratings have improved, rising to A2 in October 2025.

Both S&P and Fitch have the state rated at A-, with a stable outlook.

As of June 30, the state's total outstanding bonded indebtedness, including principal and interest payments from general obligation and special obligation bonds, is some $41.51 billion.

Earlier this week, The Wall Street Journal reported that Chicago, which had lifted its key credit rating out of junk status in 2022, needed to bridge a $1.2 billion deficit to balance its budget. In addition, a mayoral task force estimates the municipality will need to close a deficit of about $700 million, according to the report.

Write to Stephen Nakrosis at stephen.nakrosis@wsj.com

(END) Dow Jones Newswires

August 26, 2026 15:03 ET (19:03 GMT)