Alaska Receives Credit Rating Upgrade to AA+

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ACES, AGIA and Budget Reserves Credited

April 2, 2008, Juneau, Alaska – Alaska Governor Sarah Palin announced that national rating agency Standard & Poor’s is increasing its rating on the State of Alaska from AA to AA+. The last time the State’s rating was upgraded was on August 5, 1992 when Standard & Poor’s shifted from AA- to AA.

Trans-Alaska oil pipeline over the Tanana River: Photo by Frank K. (CC)

“Our fiscal prudence is being recognized by the financial markets. It affirms our efforts to control government spending and live within our means,” Governor Palin said. “We have been working hard advocating for Alaska, both within the state and outside, and I am pleased to see it paying off.”

Standard and Poor’s is viewed as the authoritative source for state bond ratings. As part of its analysis of Alaska, Standard and Poor’s referenced the State’s substantial and growing reserves, a budget surplus due to high oil prices and the implementation of the new ACES petroleum profits resource valuation, combined with prospects for a natural gas pipeline. Specifically, the Constitutional Budget Reserve Fund was mentioned as essential to the rating increase.

“This rating increase indicates that we’re on the right track,” Governor Palin said. “We will continue to work toward future upgrades by being responsible about how much we spend and how we prioritize spending, and by ensuring that we save as much as possible to prepare for the future.”

The credit upgrade may result in one quarter of one percent lower cost of capital to the State which will save tens of millions of dollars over the life of proposed bonds.

“By effectively demonstrating the strength and stability of the State of Alaska’s finances, the public will benefit with reduced costs for infrastructure and other publicly financed projects,” Revenue Commissioner Pat Galvin said.

Source: Alaska Governor