Virginia Beach Saves $12.6 Million by Refinancing Bonds

City’s Excellent Bond Ratings Help Keep Water and Sewer Rates Low

Friday, May 27, 2016

​Virginia Beach will save $12.6 million in debt service payments over the next 14 years, thanks to its outstanding bond ratings and a favorable bond market. 

On Wednesday, the city lowered its payments by refinancing $42.9 million in water and sewer bonds, which funds part of the Public Utilities capital program, including utility lines to homes and businesses. The new interest rate is an extremely low 1.814 percent. The savings will help Virginia Beach keep the lowest water rate among Hampton Roads' seven major cities. Virginia Beach also has a relatively low sewer rate.

Prior to the sale, Moody's Investor Services raised the city's bond rating for water and sewer bonds to Aa1 – one notch below a perfect Aaa rating. The city has also maintained its Triple-A ratings on water and sewer bonds from Fitch and Standard & Poor's, the other two national rating agencies.

The city on Wednesday also sold $46.5 million in new water and sewer bonds at the low rate of 2.711 percent. The money will be used to build and maintain water and sewer lines in many neighborhoods. 

"Whenever we can save taxpayers money through conservative fiscal practices, that's a good day," Finance Director Patricia A. Phillips said. "Our Water and Sewer Enterprise Fund is rock solid. It's nice to receive confirmation of that from Wall Street."

All three ratings agencies praised Virginia Beach's strong financial management:

  • Fitch praised the fund's strong financial performance, debt service coverage and favorable debt profile. 
  • Moody's noted the fund's history of sound financial operations, improved debt service coverage, strong liquidity and manageable debt position.
  • Standard and Poor's highlighted the fund's history of maintaining strong financial metrics, including strong debt service coverage, cash reserves and favorable debt and liability profiles.
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