AAA-Rated Bonds Sold at Record Interest Rates


Jan. 16, 2009

News Highlights  

  • $199.51 million sold in general obligation bonds.
  • $58.37 million sold in refunding bonds.
  • General obligation interest rate is the lowest obtained since 1975; refunding interest rate was the lowest ever.

More Information 

On Jan. 13, Fairfax County sold $199.51 million in Aaa/AAA/AAA-rated general obligation bonds to Barclays Capital Inc. The 3.567 percent interest rate obtained is the lowest rate achieved on a strictly new money bond sale by Fairfax County since its first AAA was awarded by Moody’s Investors Service in 1975. There was a record high of nine bidders for the sale.

On Jan. 14, a refunding bond sale was held, and $58.37 million in Aaa/AAA/AAA rated bonds was sold at an interest rate of 1.46 percent to Citigroup Global Markets Inc. That interest rate is the lowest refunding rate ever achieved, and the field of 11 bidders is the largest number ever obtained for Fairfax County bonds.

The sale of new public improvement bonds will primarily provide total proceeds of $204 million for schools ($155 million); public safety facilities ($1 million); parks and park facilities ($18.9 million); public library facilities ($4.5 million); and transportation improvements and facilities ($14.5 million). Voter authorization for the sale of these bonds was given by referenda in elections held from 2004 to 2008.

In advance of the bond sales, Fairfax County retained its AAA credit rating from all three rating agencies – Moody’s Investors Service, Standard & Poor’s Corporation and Fitch Ratings. Fairfax County has held the AAA rating from Moody’s since 1975, from Standard & Poor’s since 1978 and from Fitch Ratings since 1997. As of Dec. 29, 2008, only seven states, 22 counties and 23 cities in the nation have a AAA rating from each of these agencies.

The very low interest rate for the general obligation bonds reflects a number of favorable factors, according to Deputy County Executive Ed Long. “Timing the sale for January allows the county to take advantage of a period with traditionally low bond issuance and traditionally low interest rates. This year, Fairfax County also capitalized on the increased demand for high quality investments given the volatility in the bond markets. As a natural AAA credit, Fairfax County is a market leader. The value of maintaining the AAA rating cannot be more evident than completing a highly successful sale in a turbulent market.”

Since 1978, the county has saved approximately $289.82 million on bond sales due to its AAA rating on new public improvement bonds. Including refunding sales, the county has saved more than $394.91 million as a result of the AAA rating.

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