Alaska sold $190.4 million in bonds to refund previously issued securities.
The state sold $107.5 million in forward-delivery Series 2025A bonds and $82.9 million in Series 2024B bonds. The 2025A bonds, which are scheduled to be delivered in May of next year, mature between 2026 and 2035, yielding between 3.05% and 3.25%. The 2024B bonds also mature between 2026 and 2035, yielding between 2.61% and 2.87%. All of the bonds pay interest at 5%.
The securities received a rating of AA from Kroil Bond Rating Agency, Aa3 from Moody’s Investors Service, and AA from S&P Global Ratings, which upgraded Alaska from AA- in April.
“Alaska’s credit profile benefits from the build-up and maintenance of very strong liquidity and high reserve balances in its constitutional budget reserve fund,” S&P analyst Thomas Zemetis said in a press release.
Alaska’s economy depends heavily on petroleum production, making it susceptible to turbulence in global energy markets that traders fear could worsen if all-out war breaks out in the Middle East. Oil revenue made up 44% of the state’s unrestricted revenue last year, according to the official statement accompanying the sale of the bonds.
Energy markets are now on edge over fears of escalating conflict between Israel and Iran. Last month, Hamas political leader Ismail Haniyeh was killed in the Iranian capital of Tehran, an assassination Iran attributes to Israel. Last weekend, Israel raised its military to the highest level of alert to brace for Iranian retaliation.
Analysts note that Alaska’s balance sheet carries a cushion for market fluctuations. The state’s liquidity and reserves give it flexibility in managing swings in global energy prices, Zemetis said.
Alaska will use the issuance proceeds to purchase and refund bonds that it sold in 2015 and 2016.
The bonds are general obligations of the state, backed by its full faith and credit.
Jefferies LLC and Goldman Sachs & Co LLC served as underwriters on the issuance, purchasing the bonds for $209.6 million. The price reflected a premium of more than $19 million. Masterson Advisors LLC acted as municipal advisor.