Fitch Ratings reaffirmed an AA rating today for the Matanuska-Susitna Borough as it refunds $30 million in general obligation bonds in October. Fitch considers the weakness of Alaska’s economy in this stable credit rating for Mat-Su Borough.
“The borough is facing a period of spending pressures due to state cuts to education funding, creating pressure on local governments to backfill state cuts,” Fitch wrote.
The borough will use the proceeds to refund remaining 2009A and 2011A GO bonds to save some $2.8 to $3.2 million on a lower rate, according to Acting Finance Director Cheyenne Heindel.
Borough Manager John Moosey is pleased. “Despite the challenging State economy, Mat-Su Borough, again, through hard work and sound management retains its solid bond rating,” Moosey said.
In September, Fitch toured the Mat-Su Borough for the first time. In its news release today, Fitch identified key drivers:
• very strong financial performance
• superior inherent budget flexibility
• low liability burden
Other factors in the rating include:
“Revenue growth is likely to be more muted in the intermediate term due to cuts in state aid and overall weakness in the state's economy, but Fitch believes longer-term trends will likely exceed inflation.”
“The economic resource base remains narrower and more isolated than the average U.S. local economy but features solid incomes and growing healthcare, retail, construction and governmental sectors supplementing historical strengths in tourism and agricultural.”
“The borough's taxable assessed value continues to grow, increasing 3.5% in 2015 and 2.9% in 2016 to a record high of $9.3 billion, but growth is well below earlier levels. “
“Budget management in times of recovery is strong with conservative budget management and consistent efforts to maintain structural budget balance.”
“The borough's economy is less directly exposed to the state's struggling energy sector than many other areas of the state.”
“About 30% commute to Anchorage, and fewer than 10% commute to the North Slope to work in the oil fields,” Fitch writes.
Read the entire Fitch bond rating release attached here.
Photo: left to right, Stefan Hinman-Mat-Su Borough Fitch presentation designer, Tom Yang-Royal Bank of Canada, Capital Markets; Cheyenne Heindel-Mat-Su Borough Finance Director; Marc Greenough-Foster Pepper, attorney; Andrew Ward, Fitch Ratings, Director US Public Finance; John Moosey-Mat-Su Borough Manager; Randall Kowalke-Mat-Su Borough Assembly Member; Graham Schnaars- Fitch analyst; Patty Sullivan-Mat-Su Borough Public Affairs Director and tour/presentation creator.