Great financial news for Fairfax County, as we retain our Triple-A rating, the highest bond rating from all three national ratings agencies: Standard & Poor’s, Fitch Ratings and Moody’s Investors Service.
“This is a terrific accomplishment for Fairfax County and speaks to our fiscal responsibility and prudent management,” said Board of Supervisors Chairman Jeffrey McKay. “The AAA rating is the highest that a locality can receive and will save millions for county taxpayers. I was glad to meet with each of the three ratings agencies this year for the first time as chairman.”
The AAA rating indicates that Fairfax County demonstrates the strongest creditworthiness and means the county can sell its municipal bonds at a very low interest rate. Since 1978, the county has saved more than $911 million on bond and refunding sales as a result of the AAA rating when compared to industry benchmarks of other municipal bond issuers. Those funds can then be used to renovate and build schools and police stations and other critical infrastructure needs.
What is a Bond?
Bonds are a form of long-term borrowing used by most local governments to finance public facilities and infrastructure. Bond financing makes it possible to build facilities and infrastructure based on future population estimates and to spread the cost equitably over the useful life of the facilities. This kind of financing allows the cost of a facility to be spread over a number of years so that each generation of taxpayers contributes a proportionate share for the use of these long-term investments.
What This Means for Fairfax County
Proceeds from the Series 2020A bond sale will finance various countywide capital improvement projects including schools, transportation, parks, human services, public safety and libraries. The Series 2020A also included a current refunding of the Series 2012A bonds, which generated net present value savings of $15.8 million.
The favorable bond ratings enabled the county to sell bonds to Bank of America Merrill Lynch at a low interest rate of 1.80% The Series 2020A bonds’ borrowing rate of 1.80% represents a blended rate between the new money and refunding components. The borrowing rate for the new money portion only is equal to 2.0% and represents the lowest interest rate received for a new money bond deal in the county’s history.