Mayor Dan Sullivan announced today that the Municipality’s general obligation rating has been upgraded to AAA by the rating agency Standard & Poor’s (S&P). This marks the second time in a year that the Municipality’s rating has been raised. Last year, the rating went from AA to AA+, a boost that only a few cities received. In a press release from the Mayor’s office, Sullivan states, “The AAA rating will save taxpayers money in the form of reduced interest expense on the bonds that the Municipality issues going forward, including the school bonds we anticipate selling this month. This action by S&P continues to demonstrate that investors have the highest level of confidence in the Municipality of Anchorage.”
The AAA rating in Anchorage is a first for an Alaskan city. Fairbanks currently holds a double-A rating from S&P. Of the 4,000 local governments rated by S&P, only 338 hold the AAA rating, putting Anchorage in the top 10 percent of local governments.
Chief Financial Officer Lucinda Mahoney says that the new rating will save the Municipality up to $7.8 million over the next 10 years if the city issues the same amount of bonds in the coming years as it did this year. The Municipality is scheduled to issue $43 million in school bonds on Wednesday. The increased rating means the Municipality will pay less interest on those bonds.
The current review of the Municipality shows continued improvement in the fund balance policy and further diversification of the Municipality as an economic center for Alaska. The report also cited very strong management conditions with strong policies, very strong budgetary flexibility, adequate budgetary performance with a stable revenue base, very strong broad and diverse economy, very strong liquidity providing very strong cash levels to cover both debt service and expenditures, and adequate debt and contingent liabilities position. In the press release, the Mayor expressed his gratitude to the employees of the Municipality who have established and maintained a fiscally conservative environment. The upgrade is a testament to the strength of the Anchorage economy, especially coming out of the recession of 2008, where many local governments were downgraded.
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