“Illinois’s next big bond deal sounds like a municipal-market oxymoron: the worst-rated state in the nation is offering more than half a billion dollars of AAA debt.”

Comment: That’s because the bonds will be secured by a stream of sales-tax revenue that’s diverted to investors. The muni bond world has finally figured out that secured bonds are better than unsecured general obligation bonds. When municipalities and states hit the wall, expect unsecured creditors (which include unfunded pension liabilities) to be surprised to learn that all valuable assets are already mortgaged to somebody else.