Loudoun’s Triple-AAA Bond Rating Saves Taxpayers Millions

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Lost in the headlines this spring was news that Loudoun County had again achieved the highest possible rating from some of the nation’s top bond agencies, continuing a streak that dates back more than a decade.

Despite the uncertainty that covers the global economy, Moody’s, Fitch and S&P Global were confident in Loudoun’s ability to repay issued bonds, giving Loudoun another triple-AAA bond rating.

“This an unprecedented time for Loudoun and for our nation, and the credit rating agencies were understandably thorough in their evaluation of our finances,” Supervisor Matthew F. Letourneau (R-Dulles), who chairs the board’s finance committee, said in May. “That’s why it is particularly noteworthy that Loudoun’s AAA bond ratings were once again affirmed. The agencies specifically noted our strong fiscal management and diverse economy. I look forward to a successful bond sale at favorable interest rates.”

S&P’s ratings noted Loudoun’s bond rating:

  • Very robust local economy that continues to grow, and success of economic development team in attracting commercial investment;
  • Very strong overall economic and financial indicators, including flexibility and liquidity;
  • Extensive and well integrated financial management and long term planning.

Fitch’s ratings noted Loudoun’s bond rating:

  • The county’s solid expected economic prospects;
  • Very sound operating performance, supported by strong revenue growth and solid expenditure flexibility;
  • Moderate long-term liability burden.

Moody’s ratings noted Loudoun’s bond rating:

  • Sizable, diverse and growing tax base;
  • Healthy and stable fund balance and liquidity;
  • Manageable debt and pension burdens.

This AAA bond rating is important to taxpayers (both businesses and residents) because it helps the county get the best possible interest rates to finance capital projects, saving millions of dollars in interest.

Bonds have purchased to finance Loudoun’s capital infrastructure projects, including unprecedented need for school growth, as well as to relieve traffic congestion, replace fire and rescue facilities, and improve trail safety and access.

At the end of May, as reported by Renss Greene of Loudoun Now, “that good credit saved the county a little under $50 million in financing costs on the project to bring Metro’s Silver Line into Loudoun.”

Greene detailed how lease revenue bonds help pay for capital infrastructure projects that produce revenue, such as Metro’s three Silver Line stations in Loudoun, which are scheduled to open in 2021.

The county sold $267.3 million in lease bond revenue at 1.79%, which saves the county $48.5 million on the project. At a time when the county has set aside $100 million in next year’s fiscal budget to protect against budget shortfalls, the money saved by having a strong economy will be felt by businesses and residents across Loudoun County.

Additionally, Loudoun County sold $199.9 million in bonds at a favorable interest rate of 1.48%. The county received $29.8 million in premium, a portion of which will be used for LCPS projects to reduce a future issuance. The bond sale also included refundings of two outstanding bond issues; 2009B, which will achieve savings of $307,030 in FY 2021; and 2010B Build America Bonds, which will achieve savings totaling $3,775,729 over the next nine years.

Six bidders submitted offers for the county’s bonds. Morgan Stanley & Co, LLC offered the bid with the lowest interest rate, which the county accepted.

More information on Loudoun County finances and its triple-A status is online at loudoun.gov/BondRatings.

 

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