S&P, Moody’s affirm Vienna’s top-of-the-line AAA bond rating
The nation’s two top-regarded rating agencies have affirmed the Town of Vienna’s AAA bond rating, the highest rating that is available.
The ratings were reaffirmed by Moody’s and Standard & Poor’s Global Ratings as the Town prepares to issue $7.9 million in general obligation public improvement bonds later this month. The Town issues bonds every other year to fund capital improvement projects and repays the 15-year bonds using meals tax revenue and water and sewer fees. More than half of the funds raised through the 2018 bond issuance will be used for water and sewer improvement projects; the remainder will fund architectural and engineering services for renovation of the police station, several smaller public works and parks projects, and issuance costs.
S&P’s AAA rating reflects its view of the Town’s very strong economy, strong management, adequate budgetary performance, very strong budgetary flexibility, very strong liquidity, and strong debt and contingent liability position.
“We consider Vienna’s economy [to be] very strong,” the ratings agency said in its report. “…[W]e believe the [T]own’s strong financial policies and procedures as well as adherence to conservative budgeting practices provide additional rating stability.”
Moody’s assigned its most favorable Aaa rating based on Vienna’s sound financial operations and conservative budget management; stable, favorably located tax base with above-average wealth levels; and manageable debt burden.
“Vienna’s financial position will remain stable given adherence to formal fiscal policies and conservative management practices, as evidenced by the [T]own’s ability to maintain strong reserve levels over the last five years,” Moody’s states in its analysis. “Vienna’s strong financial position is supported by a history of conservative budgeting, a long-range capital improvement plan, and adherence to formal fiscal policies.”
Investors, notes Vienna’s Finance Director Marion Serfass, will likely look favorably on Vienna’s bond offering because of the Town’s AAA ratings, but also because an increase in bonds issued in December, due to changes to tax laws, means that there currently aren’t a lot of bond-issuers on the market and interest rates are expected to go up in the future.
In addition, because of its strong rating, the Town can borrow money more inexpensively (by 2/10 of a percentage point to nearly a full percentage point) than jurisdictions with lower ratings, saving Vienna and its residents money. Market indicators point to a 2.5-2.9% interest rate on the Town’s new tax-exempt bonds.
At its January 29 meeting, Town Council approved issuing up to $15 million in bonds in 2018. In addition to the $7.9 million to be issued this month, the Town anticipates issuing an additional $7 million in a taxable bank placement this summer. These funds will be used for two proposed property acquisitions, should they be approved by Town Council.