State of Illinois Investor Presentation – Negotiated Offering General Obligation Bonds, Series of November 2017D October 12, 2017
Disclaimer This investor presentation that you are about to view is provided as of October 12, 2017, for a proposed offering of the State of Illinois’ (the “State”) General Obligation Bonds, Series of November 2017D (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, underwriter or any of its affiliates 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 neither the issuer nor the underwriter is making any recommendation (personal or otherwise) or giving any investment advice and will have no liability with respect thereto. Neither the issuer nor the underwriter makes 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/e/6GYOP 1. Link expires after the negotiated sale currently scheduled for the week of October 23 rd . 1 Disclaimer
Presentation Participants State of Illinois Governor’s Office of Budget and Management 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 Charity & Associates, P.C. Co-Financial Advisors Adela Cepeda, Managing Director Thomas Huestis, Senior Managing Director Alford Evans, Director Christine Fay, Senior Managing Director Joint Bookrunners 2 Introduction
Transaction Overview The State is selling the $4.5 billion Series of November 2017D Bonds on a negotiated basis – The Series of November 2017D (the “2017D Bonds”) negotiated offering will be concurrently marketed with the $1.5 billion Series of November 2017ABC Bonds (the “2017ABC Bonds”) to be sold on a competitive basis on October 17 th General Obligation Bonds, Series of November 2017D* Preliminary Amortization ($000s)* November November $4,500,000,000 Estimated Size Maturity 2017ABC 2017D (November 1 st ) Negotiated Method of Sale (Competitive) (Negotiated) To provide funds to pay vouchers previously 2018 $ 500,000 $ - Use of Proceeds incurred by the State and to pay costs of issuance 2019 500,000 - Federally Tax-Exempt, State of Illinois Taxable Tax Status November 1, 2028 2020 - 500,000 Final Maturity Fixed Rate Coupon 2021 - 500,000 Serial bonds due on November 1, 2020-28 Amortization 2022 - 500,000 Interest Payment Dates May 1 and November 1, commencing May 1, 2018 2023 - 500,000 To Be Determined Redemption Features 2024 - 500,000 Direct, full faith and credit general obligations of the State pursuant to the General Obligation Bond 2025 - 500,000 Security and Act (the “Bond Act”). The provisions of the Bond Act are irrepealable until all bonds issued under Repayment Source 2026 - 500,000 the Bond Act, including the Bonds, are paid in full as to both principal and interest. 2027 - 500,000 Baa3 (Negative) / BBB- (Stable) / BBB (Negative) Ratings (M/S/F) 2028 - 500,000 Week of October 23, 2017 Sale Date 2029 500,000 - November 8, 2017 Closing Date Total $1,500,000 $4,500,000 PFM and PRAG Financial Advisor *Preliminary, subject to change. 3 Introduction
1. Illinois’ Strong and Diverse Economy
The State’s Credit Fundamentals are Improving Together with the 2017ABC Bonds, the 2017D Bonds will pay off approximately $6.0 billion of outstanding bills and is expected to result 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 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 and for all debt service payments on GO Bonds Note: Amounts related to the plan of finance and bill backlog are estimates 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 16 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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