Featured Municipal Bond in the Market, Week of 10/10/2016: Alaska Pension Obligation Bonds – $2.4 Billion
This week’s featured bond comes from the State of Alaska. The Alaska Pension Obligation Bond Corporation is scheduled to issue $2.4 billion in pension obligation bonds on behalf of the State of Alaska the week of October 10, 2016. These bonds are scheduled to be issued as a single series. The intended purpose of the bonds is to improve funding levels of the State of Alaska Teachers Retirement System (TRS) and Public Employees Retirement System (PERS). According to the preliminary official statement, the deposits into each account should increase funding levels to 90 percent for the TRS, and 81.5 percent for PERS. Both of these assumptions are based upon an assumed actuarial rate of return of 8 percent, accounting for the preliminary investment returns for each fund for the fiscal year ended June 30, 2016 of -0.36 percent. MuniNet’s Richard Ciccarone discussed assumed rates of return in city pension funds. Many of the same lessons and factors for city pension funds are similar for state pension funds. It should be noted that the security for these bonds relies upon appropriations from the state legislature. These details and more on purposes, security, and other matters pertaining to these Alaska pension obligation bonds can the found in the official statement, provided by MuniOS.
As of August 2016, the State of Alaska has an unemployment rate of 5.9%, which is 0.3% higher than at the same time in 2015, and 1.0% higher than the current national rate.
Provided at left is a quick snapshot of financial characteristics of the State of Alaska, along with the medians for other states, courtesy of Merritt Research Services, LLC. Merritt has many of the sector medians publicly available and regularly updated on their Benchmark Central page. (Merritt believes the data to be reliable but does not make any representations as to its accuracy or completeness). In addition to the Merritt information related to the featured bond, more information can be found on our municipal bond calendar, city, state, and county pages, and our employment database. These facts and numbers are for informational purposes, and should not be considered an official disclosure for potential investors. Investors should consult the official statement. None of the information provided should be construed as a recommendation by MuniNet Guide, MuniNet LLC, Merritt Research Services LLC, or any of their employees. Information and analysis is for informational purposes only.