AMBBA is a public corporation established to aid authorized Alaskan borrowers in financing capital improvement projects such as schools, water and sewer systems, public buildings, harbors, and docks (AS 44.85.005 through 44.85.420) (AK Admin Code ch. 144). AMBBA generates funding by selling bonds on the national market, and using the proceeds to purchase bonds from authorized borrowers within the State. Administratively supported by Department of Revenue staff, a board of five directors determines the Bond Bank’s actions such as setting interest rates and approving loans.
The Bond Bank has an excellent loan record and has received an “AA” credit rating from Fitch Ratings, and an "AA" rating from Standard & Poor's Ratings Services. With these ratings, it is able to borrow money at favorable interest rates. From inception in 1975, all Bond Bank debt service has been paid by borrowers, but the amount of interest they paid was significantly reduced.
The Bond Bank’s strong credit saved Alaskans an estimated $17.1 million in FY 2015, and $12.7 million in FY 2014. During FY 2015, the Bond Bank issued bonds totaling $175.6 million and had one $3.2 million direct loan, resulting in $81.9 million in loans to communities for new capital projects, and included $118 million used to refinance 25 community loans for savings. This compares to FY 2014 with $178.5 million in bonds issued, resulting in $191.4 million in loans to communities for projects. Over the last 10 years, the Bond Bank has saved Alaskan communities over $110 million, and has secured over $1.6 billion dollars since inception to finance the construction of key projects; including schools, roads, utilities, harbors, hospitals, and other municipal facilities.
Some smaller communities are at a disadvantage in the financial markets. They may have lower bond ratings, and although credit worthy, have not issued bonds or notes, have little outstanding debt, or lack investor familiarity. The Bond Bank is able to borrow money at favorable interest rates to purchase the bonds of Alaskan municipalities and authorized borrowers. These municipalities and authorized borrowers then pay principal and interest to the Bond Bank on their debt.
During fiscal year 2015, the legislature passed, and the Governor signed into law a bill to authorize the Bond Bank to make loans to Joint Action Agencies and Regional Health Organizations, effective May 26, 2015. Joint Action Agency lending is now part of the main political subdivision program. Regional Health Organization lending is limited to no more than $205 million in total, no more than 49% of any single project where the other 51% of the project's funding is in place, and not more than $102.5 million for any single project.
Whether you are a new community to the Bond Bank, or you already have loans outstanding, we are here to help you analyze your current debt service structure, and see if there’s an opportunity to obtain new financing or perform a refunding of an outstanding series of bonds.