SAN FRANCISCO - Standard & Poor's has raised its rating for Alaska general obligation bonds to AA-plus from AA.
Rising oil prices, combined with a new taxation system for oil, have led to a gusher of money into the state government, which relies on petroleum-related income for the lion's share of its general fund budget.
"The raised ratings reflect the state's very substantial budget surpluses in 2008 and 2009 and the successful implementation of a new, more progressive tax on oil production," analyst Ian Carroll said in a news release issued Thursday. "The state also enjoys a moderate debt burden, as it funds most of its capital projects on a pay-as-you-go basis."
In connection with the GO upgrade, Standard & Poor's also raised the underlying rating for Alaska's outstanding certificates of participation and 2005 lease revenue refunding bonds to AA from AA-minus. The state's outlook is stable.
With the price of oil at a historic high, the state projects a substantial - and record - $2.6 billion surplus in the current year, the rating agency said.
A new method of taxing oil production - called Alaska's Clear and Equitable Share, or ACES - was introduced last November and has already significantly increased revenues by taxing oil producers based on their net income, according to Standard & Poor's.
Alaska's economy, because of the dominance of the petroleum sector, is doing very well, analysts said.
Fitch Ratings assigns a AA rating and stable outlook to Alaska GOs. Moody's Investors Service rates the state Aa2.
