Fairfax County Sells Sewer Revenue Refunding Bonds


Fairfax County Office of Public Affairs
12000 Government Center Parkway, Suite 551
Fairfax, VA 22035-0065
703-324-3187, TTY 703-324-2935, FAX 703-324-2010

Oct. 7, 2004

 

Fairfax County Sells Sewer Revenue Refunding Bonds

 

On Oct. 5, Fairfax County sold sewer refunding bonds to Citigroup Global Markets Inc. at the interest rate of 4.33 percent. An amount of $94.005 million in Aa3/AAA/AAA rated sewer revenue refunding bonds was sold for a term of 24 years. This is the lowest competitive bond interest rate that the sewer revenue bonds have received other than special program interest rates obtained from the State Revolving Loan Fund.

There were eight bids submitted; the bids ranged from 4.33 to 4.37 percent. The closeness of the bids is a reflection of the quality of the sewer revenue bonds. These refunding bonds replace the 1996 sewer revenue bonds that had a true interest cost of 5.907 percent, resulting in a net present value savings of $7.72 million, for an 8.4 percent total savings.

This bond sale refunds a total of $91.43 million of outstanding Series 1996 sewer revenue bonds. The refunding bonds were sold to take advantage of current market conditions and low interest rates in order to replace bonds that have higher interest rates. The refunding bonds will fund an escrow account and redeem the outstanding bond obligations at their earliest possible call dates. With this refunding, a 1993 refunding of 1986 sewer revenue bonds, and the county’s defeasance of $55.3 million of the outstanding 1993 sewer revenue refunding bonds in November 2003, the county has refunded $221.93 in sewer revenue bonds and has obtained cumulative net present value savings of approximately $15.753 million since 1993.

In preparation for this sale, the County Sewer Fund requested a bond rating from Moody’s Investors Service, Standard and Poor’s Corporation and Fitch Ratings. Two of the three rating agencies gave the Sewer Fund a triple-A rating. The Sewer Fund has held the AAA rating from Fitch since 2001, and from Standard and Poor’s since 2003. Moody’s Investors Service rated the Sewer Fund Aa3 effective 2003, which was an increase from a previous rating of A1.

In the ratings reports received, the county’s sewer system was complimented for its financial management. Specifically, according to Fitch, “The ‘AAA’ rating on Fairfax County’s sewer revenue bonds reflects the sewer system’s strong service area, solid coverage levels, substantial pay-as-you-go financing for capital projects, and strong financial forecasting and capital planning.”

Standard and Poor’s based its rating of the sewer system on “The strong service area economy with above-average income levels, strong financial operations generating strong coverage on senior-lien debt, and a sound cash position while maintaining competitive rates.”

Moody’s noted, “The rating reflects the system’s growing, affluent customer base, healthy financial operations which provide ample coverage of senior lien debt service, and affordable debt position.”

For more information, contact Leonard Wales, county debt manager, at 703-324-4087, TTY 711.


FAIRFAX COUNTY IS COMMITTED TO A POLICY OF NONDISCRIMINATION IN ALL COUNTY PROGRAMS, SERVICES AND ACTIVITIES AND WILL PROVIDE REASONABLE ACCOMMODATIONS UPON REQUEST. TO REQUEST SPECIAL ACCOMMODATIONS, CALL 703-324-3187, TTY 703-324-2935. PLEASE ALLOW FIVE WORKING DAYS IN ADVANCE OF EVENTS IN ORDER TO MAKE THE NECESSARY ARRANGEMENTS

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