Rating agency improves Alaska’s credit outlook

Standard & Poor’s said it could lower Alaska’s credit rating if the state sells pension obligation bonds. (Creative Commons photo by eflon)

Standard & Poor’s has improved its outlook on the state’s bonds, from negative to stable. It took the action Friday in part as a response to a new state law. The measure outlines a plan to draw money from Alaska Permanent Fund earnings to pay for state government.

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The improved outlook means the rating agency no longer expects to lower the state’s credit rating. The rating affects how much the state must pay those who buy Alaska bonds. The lower the rating, the more the state must pay to borrow money.

S&P analysts cited the law as one of several factors that led them to revise the outlook for Alaska. The law says the state can draw up to 5 percent of the permanent fund’s value each year. The money can be used to pay for state government, as well as for permanent fund dividends. Higher oil prices also contributed to the improved outlook.

Gov. Bill Walker signed the law Wednesday.

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Andrew Kitchenman is the state government and politics reporter for Alaska Public Media and KTOO in Juneau. Reach him at akitchenman@alaskapublic.org.