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TextFairfax County Refunds $171 Million of Bonds
Office of Public Affairs
12000 Government Center Parkway, Suite 551
Fairfax, VA 22035-0065
703-324-3187
Feb. 14, 2003
Fairfax County Refunds $171 Million of Bonds
On Feb. 6 Fairfax County sold $171.165 million in Aaa/AAA/AAA-rated tax-free 10-year general obligation refunding bonds. The bonds were sold to Lehman Brothers at a true interest rate of 2.72 percent. This rate is naturally lower than the rates the county normally receives for 20-year debt due to the shorter maturities of the 1993, 1994 and 1995 bonds that were refunded. This interest rate is one of the lowest interest rates achieved by Fairfax County since the first AAA rating was awarded by Moody’s Investors Service in 1975. The refunding will result in savings of approximately $12.8 million net present value of the bonds refunded.
The refunding bonds were sold to take advantage of current market conditions and low interest rates in order to refund outstanding bonds that have higher interest rates and are subject to redemption prior to their stated maturities. The refunding bonds will fund an escrow account and redeem the outstanding bond obligations at their earliest possible call dates. Including this refunding, the county has refunded more than $1.25 billion of the outstanding general obligation debt since 1989 for cumulative net present value savings of approximately $60 million.
The county received four bids for the bonds with a high bid of 2.74 percent. The closeness of the bids indicates the highly competitive nature and high quality of Fairfax County bonds in the market.
With this bond issue, Fairfax County maintains its status as a top rated issuer of tax-free securities from Moody’s Investor Services, Standard and Poor’s Corporation and Fitch Ratings. Fairfax County has the highest credit rating possible for a local government - Aaa from Moody’s Investors Service Inc., AAA from Standard and Poor’s Corporation and AAA from Fitch Ratings. Only nine states, 23 counties and 15 cities have Triple-A ratings from all three investor services. The credit ratings enable Fairfax County to sell bonds at favorable interest rates compared to those of municipalities not so rated, resulting in substantial savings for county taxpayers over the life of the bonds. Since 1978, the county has saved an estimated $173 million due to the benefits of the Triple-A rating. With the addition of the $60 million in savings from the various refunding sales, total savings are estimated at $233 million.
For more information, contact Len Wales, Department of Management and Budget, at 703-324-2391, TTY 711 (Virginia Relay Center).
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