Press Release|Public Finance
KBRA Upgrades State of Alaska GO Bonds to AA+; Assigns AA Rating to State of Alaska Lease Revenue Refunding Bonds Series 2025A and 2025B (Forward Delivery) (Goose Creek Correctional Center Project); Upgrades Alaska Municipal Bond Bank GO Bonds to AA
25 Feb 2025 | New York
KBRA upgrades the long-term rating for the State of Alaska General Obligation Bonds to AA+, from AA.
KBRA simultaneously assigns a long-term rating of AA to the Matanuska-Susitna Borough State of Alaska Lease Revenue Refunding Bonds, Series 2025A and Series 2025B (Forward Delivery) (Goose Creek Correctional Center Project).
Finally, KBRA upgrades the long-term rating for the Alaska Municipal Bond Bank Authority General Obligation Bonds to AA, from AA-.
The rating outlook for each obligation is Stable.
Key Credit Considerations
The rating actions reflect the following key credit considerations:
Credit Positives
- Ample reserves and direct liquidity available to support budgetary operations;
- Robust natural resource base, which will likely continue to be developed and serve as a key economic driver;
- Critical role in U.S. strategic interests deriving from its vast mineral reserves and position relative to geopolitical competitors anchors significant defense-related economic activity and continuing federal support.
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.
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