The Moody’s credit rating agency has downgraded Alaska’s credit rating, affecting more than $744 million of outstanding general obligation bond debt.
Citing heightened volatility in the state’s revenues and an unprecedented imbalance caused by the state’s reliance on oil prices, the ratings agency assigned drop Alaska from an AAA to an AA1.
According to the agency’s credit opinion, even if the state cuts spending significantly it cannot keep pace with falling oil prices.
Absent changes in the way the state spends, Moody’s estimates that Alaska will run out of budget reserves by 2019. The agency expects crude oil prices to remain below $50 a barrel through 2019.
In an emailed statement, Gov. Bill Walker says the news is disappointing, but he is confident the state can improve its fiscal outlook.