State of Illinois Investor Presentation – Competitive Offering General Obligation Bonds, Series of December 2017AB November 17, 2017
Disclaimer This investor presentation that you are about to view is provided as of November 17, 2017, for a proposed offering of the State of Illinois’ (the “State”) General Obligation Bonds, Series of December 2017AB (the “Bonds”) . This presentation has been prepared for information purposes only and for your sole and exclusive use in connection with the proposed transaction. The information contained herein is subject to completion and amendment. Any offer or solicitation with respect to the Bonds will be made by means of a final official statement. If you are viewing this investor presentation after the date stated above, events may have occurred that have a material adverse effect on the financial information presented. This presentation does not constitute nor does it form part of an offer to sell or purchase, or the solicitation of an offer to sell or purchase, any securities or an offer or recommendation to enter into any transaction described herein nor does this presentation constitute an offer, commitment or obligation on the part of the issuer to provide, issue, arrange or underwrite any financing or enter into any other transaction. You will be responsible for making your own independent investigation and appraisal of the risks, benefits, appropriateness and suitability of the proposed transaction and any other transactions contemplated by this presentation and the issuer does not make any recommendation (personal or otherwise) or giving any investment advice and will have no liability with respect thereto. The issuer does not make a representation or warranty as to the (i) accuracy, adequacy or completeness of any information in this investor presentation or (ii) legal, tax or accounting treatment of any purchase of Bonds by you or any other effects such purchase may have on you and your affiliates. This investor presentation contains “forward - looking” statements that involve risks, uncertainties and assumptions. If the risks or uncertainties ever materialize or the assumptions prove incorrect, the results may differ materially from those expressed or implied by such forward-looking statements. Accordingly, we caution you not to place undue reliance on these statements. All statements other than the statements of historical fact could be deemed forward-looking. All opinions, estimates, projections, forecasts and valuations are preliminary, indicative and are subject to change without notice. THE PRINTING, DUPLICATING, DOWNLOADING, SCREEN CAPTURING, ELECTRONIC STORING, RECORDING, PUBLISHING OR DISTRIBUTING OF THIS INVESTOR PRESENTATION IN ANY MANNER IS STRICTLY PROHIBITED. By viewing this investor presentation you acknowledge that you understand and agree to the provisions of this page. Link 1 to the Preliminary Official Statement (“POS”) : www.munios.com Disclaimer 1: Link Expires on November 29, 2017 1
Financing Team State of Illinois Governor’s Office of Management and Budget Scott Harry, Budget Director Kelly Hutchinson, Director of Capital Markets Alexis Sturm, Chief of Staff Kim Fowler, Chief Legal Counsel Co-Bond Counsel Chapman and Cutler LLP Hardwick Law Firm, LLC Financial Advisor Sycamore Advisors, LLC Diana Hamilton, President 2 Introduction
Transaction Overview General Obligation Bonds, Series of December 2017AB The State is selling the $750 million Series A: $655,000,000 Series of December 2017AB Bonds Series B: $95,000,000 Estimated Size (together, the “Bonds”) on a competitive Total: $750,000,000 basis on November 29 th . Method of Sale Competitive The Series 2017A Bonds are being issued to The 2017 Series A Bonds will be fixed provide funds to finance capital projects under the rate bonds and have principal State’s capital program and to pay costs of Use of Proceeds issuance. The Series 2017B Bonds are being issued amortizing December 1, 2018 – 2042. to finance information technology projects and to pay costs of issuance. The 2017 Series A Bonds maturing on Federally Tax-Exempt, State of Illinois Taxable Tax Status or after December 1, 2028 are subject to Fixed Rate Coupon optional redemption on or after December 1, 2027. Series A: December 1, 2018-2042 Amortization Series B: December 1, 2018-2027 Interest Payment The 2017 Series B Bonds will be fixed June 1 and December 1, commencing June 1, 2018 Dates rate bonds and have principal amortizing December 1, 2018 – 2027. Series A: 10-Year Par Call, December 1, 2027 Redemption Features Series B: Non-Callable The 2017 Series B Bonds are not subject Direct, full faith and credit general obligations of the State pursuant to the General Obligation Bond to optional redemption. Security and Act (the “Bond Act”). The provisions of the Bond Act are irrepealable until all bonds issued under Repayment Source the Bond Act, including the Bonds, are paid in full Bidders have the option to designate as to both principal and interest. and aggregate one or more consecutive Ratings Baa3 (Negative) / BBB- (Stable) / BBB (Negative) maturities of a series of Bonds as term bonds. November 29, 2017 Sale Date December 13, 2017 Closing Date Sycamore Advisors, LLC Financial Advisor 3 Introduction
1. Illinois’ Strong and Diverse Economy
The State’s Credit Fundamentals are Improving The State recently issued $6.0 billion of the Series of November 2017ABCD Bonds, the proceeds of which were used to pay approximately $6.5 billion of outstanding bills, resulting in the receipt of additional federal funds By the end of fiscal year 2018, the bill backlog is expected to be approximately $7.5 billion, a nearly 50% reduction from the Comptroller’s estimate of the bill backlog on September 30, 2017. Recent Developments Passage of fiscal year 2018 Budget Permanent increase in personal income tax and corporate income tax rates to 4.95% and 7.00% respectively Passage of Tier 3 Pension Plan and funding changes Passage of Senate Bill 1947 (PA 100-465), which provided for an evidence-based method of allocating funding among the state’s school districts Reauthorization of EDGE Tax Credits to improve the State’s competitiveness for major economic development projects Reduced risk to swap counterparties by renegotiating rating triggers Inherent Credit Strengths Sovereign State with significant revenue flexibility Illinois’ economy is the 5 th largest in the United States and 18 th largest worldwide 1 The Bond Act constitutes an irrevocable continuing appropriation for all debt service payments on GO Bonds 1. Source: US Department of Commerce Bureau of Economic Analysis for the Illinois ranking. IMF and World Bank for the international ranking. 5 Illinois’ Strong and Diverse Economy
Illinois Remains the Economic Powerhouse of the Midwest and Continues to Grow Upward Trend in Illinois Real GDP Per Capita 1 Illinois Unemployment Continues to Decline Illinois outperforms the U.S. and Great Lakes Region in terms of Real GDP Unemployment approximates national levels 10% $55,000 $54,000 9% $53,000 8% $52,000 7% $51,000 6% $50,000 5% $49,000 4% $48,000 3% $47,000 $46,000 2% $45,000 1% 2012 2013 2014 2015 2016 0% United States Illinois Great Lakes Region 2012 2013 2014 2015 2016 Per Capita Personal Income Illinois’ Per Capita Income is ranked 3 rd among the 10 most populous states and 15 th among all states $54,000 $52,000 Illinois United States $50,000 $48,000 $46,000 $44,000 $42,000 $40,000 $38,000 $36,000 $34,000 $32,000 $30,000 2012 2013 2014 2015 2016 Source: U.S. Department of Commerce, U.S. Census Bureau; Bureau of Economic Analysis 1. 2009 Chained Dollars 6 Illinois’ Strong and Diverse Economy
Illinois’ Economic Growth is Driven by a Large, Highly Educated Population and Diverse Employment Mix Illinois is the 5 th most populous state in the Illinois Non-Farm Employment by Industry nation and its highly educated population has Broad employment base with no industry accounting for more than 20.1% fueled the region’s growing and diversified economy Trade, Construction, Transportation Professional Illinois’ economy is the 5 th largest in the 3.6% and Utilities, and Business 20.1% United States and 18 th largest worldwide Services, Mining, Logging, 15.5% Information and The State is home to two of the country’s Other Services, Education and 5.9% Health busiest airports and is a major hub for rail, Services, trucking and waterway transportation 15.2% Financial networks Activities, 6.4% Government, Manufacturing, 13.8% 9.5% Leisure and Hospitality, 9.9% Select Illinois-Headquartered Fortune 500 Companies 36 Fortune 500 companies are headquartered in Illinois; only New York, California, and Texas have more Source: Bureau of Labor Statistics; Fortune; US Department of Commerce Bureau of Economic Analysis; IMF; World Bank. 7 Illinois’ Strong and Diverse Economy
2. FY 2018 Budget Update
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