KBRA Assigns AA Rating, Stable Outlook to State of Alaska General Obligation Refunding Bonds; Affirms Ratings for Related Bonds
July 25 2024 - 3:46PM
Business Wire
KBRA assigns a long-term rating of AA to the State of Alaska
General Obligation Refunding Bonds, Series 2024B and General
Obligation Refunding Bonds, Series 2025A (Forward Delivery). KBRA
additionally affirms the AA long-term rating on the State's parity
General Obligation Bonds, and the AA- long-term rating on the
Alaska Municipal Bond Bank Authority's G.O. Bonds outstanding.
The Stable Outlook reflects the expectation that Alaska will
continue to meet ongoing budgetary requirements with measured
recurring utilization of APF-ERA transfers resulting in the
continuing maintenance of very strong reserves. The outlook is
further supported by continued exploration and development of the
State’s vast energy resources, particularly in the Alaska North
Slope and Cook Inlet basins, and KBRA’s expectation that planned
resource extraction projects will continue to support the State’s
long-term comprehensive Fiscal Plan. In KBRA’s view, the State's
prudent financial management will remain critical to countering its
inherent vulnerability to both environmental risks and volatility
in the energy sector.
Key Credit Considerations
The rating actions reflect the following key credit
considerations:
Credit Positives
- Ample reserves and direct liquidity available to support
budgetary operations; and,
- Robust natural resource base, which will likely continue to
serve as a key economic driver.
Credit Challenges
- Exposure to commodity pricing volatility, given the employment
and economic output concentration in natural resource extraction
and production; and,
- Fluctuating budgetary performance, buoyed by the reliance on
accumulated reserves to balance fiscal operations.
Rating Sensitivities
For Upgrade
- Decreased reliance on APF-ERA earnings to balance budgetary
operations.
- A meaningful diversification of revenue sources, alleviating
the concentration in energy price sensitive natural
resource-derived revenues.
- Increased diversification of the State economy over time could
lead to upward rating migration.
For Downgrade
- A weakening of budgetary performance, reserves, or direct
liquidity.
- A continuation of structural budgetary imbalance, leading to
the depletion of available reserves to levels no longer
commensurate with the assigned rating.
To access rating and relevant documents, click here.
Methodologies
- Public Finance: U.S. State General Obligation Rating
Methodology
- Public Finance: U.S. State Annual Appropriation Obligation
Rating Methodology
- ESG Global Rating Methodology
Disclosures
A description of all substantially material sources that were
used to prepare the credit rating and information on the
methodology(ies) (inclusive of any material models and sensitivity
analyses of the relevant key rating assumptions, as applicable)
used in determining the credit rating is available in the
Information Disclosure Form(s) located here.
Information on the meaning of each rating category can be
located here.
Further disclosures relating to this rating action are available
in the Information Disclosure Form(s) referenced above. Additional
information regarding KBRA policies, methodologies, rating scales
and disclosures are available at www.kbra.com.
About KBRA
Kroll Bond Rating Agency, LLC (KBRA) is a full-service credit
rating agency registered with the U.S. Securities and Exchange
Commission as an NRSRO. Kroll Bond Rating Agency Europe Limited is
registered as a CRA with the European Securities and Markets
Authority. Kroll Bond Rating Agency UK Limited is registered as a
CRA with the UK Financial Conduct Authority. In addition, KBRA is
designated as a designated rating organization by the Ontario
Securities Commission for issuers of asset-backed securities to
file a short form prospectus or shelf prospectus. KBRA is also
recognized by the National Association of Insurance Commissioners
as a Credit Rating Provider.
Doc ID: 1005256
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240725707967/en/
Analytical Contacts
Michael Taylor, Senior Director (Lead Analyst) +1 646-731-3357
michael.taylor@kbra.com
Peter Scherer, Senior Director +1 646-731-2325
peter.scherer@kbra.com
Karen Daly, Senior Managing Director (Rating Committee Chair) +1
646-731-2347 karen.daly@kbra.com
Business Development Contacts
William Baneky, Managing Director +1 646-731-2409
william.baneky@kbra.com
James Kissane, Senior Director +1 646-731-2380
james.kissane@kbra.com