North Slope Borough, Alaska Receives AA+ Rating for 2024 Bonds
- KBRA has assigned a long-term AA+ rating with a Stable Outlook to the North Slope Borough's General Obligation Bonds, Series 2024A and 2024B.
- The Borough's financial position is strong, bolstered by effective budget management and a Permanent Fund balance of $1.113 billion.
- Despite these strengths, the heavy reliance on the petroleum industry poses risks, indicating the need for careful financial oversight.
KBRA has assigned a long-term rating of AA+ with a Stable Outlook to the North Slope Borough's General Obligation Bonds, Series 2024A and 2024B. This rating reflects the Borough's strong financial position, characterized by effective budgetary management and a robust Permanent Fund, which had a balance of $1.113 billion as of June 30, 2024. The Borough's tax base, while substantial, is heavily reliant on the petroleum extraction industry, which has faced production declines over the past three decades. Despite this challenge, the Borough maintains a low debt level relative to its tax base and a rapid debt amortization structure, with 74% of principal due within five years. The rating is supported by conservative financial management practices and significant reserves, although the concentration of the tax base poses risks to revenue stability. Future upgrades to the rating could occur with a substantial increase in the Permanent Fund or changes in the debt structure, while potential declines in the tax base could negatively impact the rating.