Moody's Change Means Better Prospects for Lower Borrowing Costs
November 20, 2004
Favorable bond ratings help state and local governments borrow at lower interest rates, reducing the cost of new schools, roads, ports and other capital investments. Credit rating changes are usually preceded by an indicative outlook, making today's announcement good news for Alaska issuers of public debt and holders of Alaska bonds, said Governor Frank H. Murkowski.
"I am pleased with this increased confidence in the future of our great state, and I share that confidence," the governor said. "I think it is clear that our outlook has improved significantly since 2002."
In removing the negative outlook it placed on the state in 2002, Moody's cited the state's low debt burden, the expanding but still narrow economic base, sizeable reserve fund balances, and conservative financial planning efforts to accommodate the eventual limitation of oil revenues. They said, "rising oil prices and disciplined spending controls enabled the state to reduce its dependence on the CBRF (Constitutional Budget Reserve fund) for budget balance ."
Moody's also acknowledged efforts to bring North Slope natural gas to market. Last month the Department of Revenue, along with the State's financial advisors, briefed Moody's on progress made in Alaska and in the U.S. Congress aimed at construction of a pipeline to bring Alaska's vast North Slope natural gas resources to market.
"I want to express my thanks to the fine people at Moody's Investors Service, who have always gone the extra distance to understand the unique fiscal and economic circumstances of our state," Murkowski said.
Moody's tempered its improved
outlook for the state by cautioning that, "Our rating of
Aa2 with a stable outlook is predicated on the assumption that
the state will ultimately make the hard decisions necessary to
address its structural budget problems."
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