(Adds detail on revision, comment from Moody‘s, background on oil plunge)
By Tim Reid
LOS ANGELES, Dec 16 (Reuters) - Moody’s Investors Service revised Alaska’s credit outlook from stable to negative on Tuesday, saying the plunge in oil prices “threatens to rapidly and significantly reduce the state’s budgetary reserves.”
The move by Moody’s comes after Alaska was recently forced to slash its forecast crude prices for the 2015 fiscal year. Fitch, another ratings agency, said in a Dec. 11 report that the price drop will lower Alaska’s budget revenue forecast by about $2 billion.
Moody’s said its revision applies to $840 million of general obligation (GO) debt, rated Aaa; $290 million of subject-to-appropriation debt, rated Aa1; and about $870 million of bonds backed by the state’s moral obligation that have been issued by the Alaska Municipal Bond Bank and the Alaska Energy Authority, rated Aa2.
Moody’s affirmed all three ratings, including the Triple-A rating assigned to the state’s GO bonds.
Several oil-dependant U.S. states are bracing themselves for a revenue hit after crude prices have plunged by over 40 percent since June.
One factor in the downward revision, Moody’s said, was Alaska’s reliance on petroleum, which it described as “a volatile revenue source subject to global political and economic factors.”
Reporting by Tim Reid; editing by Andrew Hay