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 / Outlook Negative” credit rating from Fitch Ratings, and an "AA / CreditWatch Negative" 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.
During fiscal year 2016, the Bond Bank entered into 16 loan agreements. Bond Bank loans resulted in 7 construction projects located in 5 communities, and refinanced 3 existing loans for savings. Included in fiscal year 2016 totals are the University of Alaska Fairbanks heat and power plant project, and a refinancing of the Tanana Chiefs Conference Chief Andrew Isaac Health Center for savings. The Bond Bank issued approximately $233 million in bonds that generated $256.9 million in funding. Bond Bank activity resulted in one $3.1 million direct loan, $180.6 million in loans for new capital projects, and $76.3 million to refinance loans for savings. Bond Bank activity in fiscal year 2016 resulted in present value savings of approximately $50.7 million to all borrowers.
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.