Alaska's IDEA lands AA-plus bond rating on notes

The Alaska Industrial Development and Export Authority received a AA-plus bond rating and stable outlook from S&P Global Ratings on $75 million in revolving fund bond anticipation notes.

The rating places AIDEA among the top state-affiliated development banks nationwide, matching or exceeding the ratings of most peers, AIDEA said.

"AIDEA's AA-plus bond rating from S&P is a milestone we're proud of," AIDEA's Acting Board Chairman Bill Kendig said in a statement.

"It reflects the exceptional work of Executive Director Randy Ruaro and his staff, and it affirms our disciplined financial management and strategic investments that strengthen Alaska's communities and businesses," Kendig said.

AIDEA is a quasi-governmental entity created by Alaska in 1967 to promote economic development by providing financing and investment, S&P said in a Dec. 23 credit report.

The BANs will be sold in two series: $25 million series 2026A revolving fund bond anticipation notes to reimburse projects in its loan and project portfolio and $50 million series 2026B revolving fund BANs to provide interim financing for a power transmission line project.

AIDEA expects to permanently finance the BANs within the five-year maturity window, S&P said.

The notes are rated to the strength of available revolving-fund resources as described in the 2025 amended and restated master trust agreement, S&P said.

"Our rating primarily reflects the significant loss coverage cushion afforded by AIDEA's large level of excess pledged loan repayments and sizable pledged reserves relative to debt service requirements," S&P said.

S&P could lower the rating if loss coverage substantially deteriorates, particularly if its view of operating performance weakens through occurrence of pledged loan defaults or delinquencies.

The rating agency doesn't anticipate the rating going higher given "plans to issue an undetermined but potentially material amount of additional debt in the next few years, as well as its portfolio of relatively high-risk loans compared with similarly rated long-term municipal pools," analysts said.

The development bank has delivered record returns over the past two years earning the AA-plus bond rating, which is stronger than the state's ratings and equal to the Alaska Housing Finance Corp., Ruaro said in a statement.

"Strategic investments in major resource development projects, such as the Red Dog road and port, generate returns of 10% or more for AIDEA and substantial additional revenue for the state through dividends, taxes, and royalties," Ruaro said. "Investments in resource development projects are essential for Alaska's financial stability and growth."

The state's general obligation bonds are rated: Aa2 by Moody's Investors Service (MCO), AA-minus by Fitch Ratings, AA by S&P and AA-plus by Kroll Bond Rating Agency. AHFC has AA-plus ratings from Fitch and S&P and a Aa2 from Moody's.