Maintaining AAA Bond Rating Contributes to Favorable Interest Rate on School Bond Sale

Thursday, 30 Apr 2015

County News & Features

PRINCE WILLIAM COUNTY, VA. . .On Sept. 23, 2014, Prince William County sold $82.5 million in general obligation bonds. The bonds were sold as a stand-alone issue through the Virginia Public School Authority (VPSA). The funds will be used to finance capital costs for one new elementary school (Devlin Road Elementary), one elementary school addition (Featherstone Elementary), one-half the cost of the construction costs of the 12th high school, and architectural and design services for three schools and one maintenance facility.

By using a stand-alone issue, as opposed to a VPSA pooled sale, Prince William County was able to secure an extremely low true interest cost of 2.619 percent and received a premium of $7.2 million. This is remarkably close to the historically low true interest cost of 2.606 percent the County obtained just two years ago on its 2012 VPSA stand-alone bond sale.

The bonds were awarded to Citigroup Global Markets, Inc. after a competitive bidding process that attracted seven bidders, which is a large number of bidders for a municipal sale. The bonds received AAA ratings from Fitch, Standard & Poor's and Moody's. This rating level was awarded by all three rating agencies and Prince William County is one of only 38 counties nationwide to carry the coveted "Triple-AAA" rating.

Some of the reasons cited by the three rating agencies as the basis for the high level of credit with a stable outlook include: the County's sizable, wealthy tax base; highly-educated labor pool and low unemployment; strong financial flexibility with ample liquidity; and strong, effective management that adheres to its prudent and institutionalized financial and debt policies.

The closing date of the bond sale is scheduled for Oct. 7, 2014.

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