City Refinances Bonds with Confidence from Ratings Firms, but Negative Outlook Lingers

The City of Alexandria has refinanced $66.5 million in previously issued city general obligation bonds at a 1.98 percent rate offered by J.P. Morgan Securities.

The move will save the city about $3.58 million over the life of the bonds, according to a statement from the city.

“Getting Alexandria’s AAA/Aaa ratings reaffirmed indicates that the Alexandria City Council and city management continue to demonstrate strong financial and budget polices, and our overall long-range strategic direction is solid,” said Mayor Bill Euille.

Standard & Poor’s and Moody’s Investors Service recently reaffirmed the city’s bond ratings of AAA and Aaa, respectively.

S&P said, according to the city, that Alexandria’s rating reflects a “deep, diverse and strongly performing local economy” and “strong financial performance and management.”

Moody’s Investors Service agreed, declaring that the city’s financial strengths include a “strong and vibrant tax base,” “a sound and stable financial condition” and “conservative budgeting practices.”

However, Moody’s continues to assign Alexandria a top rating with a “negative outlook.” S&P continues its AAA rating without any qualification.

Last summer, Moody’s , but also assigned the city a negative outlook because of Alexandria’s financial relationship with the federal government.

In the fall, the city spoke to Moody’s to discuss questions specific to the negative outlook of all the Moody’s Aaa rated jurisdictions in the Washington, D.C., region, focusing on federal procurement, federal employment and healthcare.

“We provided information about the city that we believed showed that we have a strong financial position that does not place a heavy reliance on the federal government to be successful,” said city spokesman Tony Castrilli. “We focused on the city’s diverse economy, our high income and education levels and our strong financial management as reasons we should not be linked to the credit of the federal government. We, nor any other of the Aaa rated jurisdictions in this region, were not successful in removing the link to the federal government since the final decision from Moody’s was based on the entire region’s linkage to the federal government and not the city individually.”

The city plans to issue new bonds in the summer, according to Castrilli.