Moody's Cuts Alaska Credit Outlook, Citing Oil Plunge

A sharp drop in oil prices led ratings firm Moody's Investors Service on Tuesday to cut its outlook on Alaska's credit rating to negative from stable. Moody's said the oil plunge, which has seen the U.S. benchmark drop from around $107 a barrel in June to trade at a five-year low in the mid-$50s this week, threatens to "rapidly and significantly" reduce the state's budgetary reserves by the end of fiscal 2016. "A rapid reserve-depletion scenario -- especially in the absence of feasible plans to rebuild reserve funds, to diversify tax revenue streams or to impose strict cuts on expenditures -- would be consistent with a lower credit rating," Moody's said.