S&P downgrades Alaska’s credit rating, citing oil prices

Oil prices began falling in the latter half of 2014. Image: NASDAQ.
Oil prices began falling in the latter half of 2014. Image: NASDAQ.

Alaska’s credit rating dropped a notch Tuesday from AAA to AA+. During a press conference, Gov. Bill Walker says that isn’t likely have a short-term impact on the state using bonds to fund capital projects or other state spending in the future.

“To tie it to a dollar amount, if we borrowed a million dollars today, we’d pay an additional thousand dollars per year on that million dollars as a result of this bond rating adjustment. So it’s not that it’s a major downgrade, but it shows a trend.”

It could, however, affect efforts to borrow money to build an in-state gas pipeline later on.

Prominent rating agency Standard & Poor’s had warned this summer that it might drop the state’s rating if no action was taken to resolve the state’s budget deficit. Walker says the drop was a little pre-emptive, given that the state Legislature has not yet convened to discuss the budget.

In a statement, the S&P says the drop was related to continually declining oil revenues, and warns of future downgrades.