Alexandria — After both major rating agencies reaffirmed the City of Alexandria’s top bond ratings, the city earned favorable interest rates on the competitive sale of new bonds and the refinancing of existing bonds.
On July 22, the city issued approximately $23 million in general obligation bonds, will be used for schools, parks, Metro and other transportation improvements and infrastructure, and public buildings. The bonds sold at a true interest cost of 2.7513 percent, which is one of the lowest the city has earned in recent years. “True interest cost” represents the total cost of the debt, and includes interest payments, fees, and other components.
The city also refinanced approximately $10 million of taxable bonds that had previously been issued for affordable housing initiatives. The new true interest cost of 2.511 percent will provide a net present value savings of $1.255 million over the next 13 years, which will be used to fund additional affordable housing opportunities.
The low interest rates and subsequent savings are the result of the city’s “AAA” and “Aaa” credit ratings from Standard and Poor’s (S&P) and Moody’s Investors Service, respectively, which were reaffirmed earlier in July. The city has maintained these top grades from both major bond rating agencies since 1992. The higher the rating, the lower the interest rate required by investors.