Virginia Beach Refinancing Saves Taxpayers $4.4 Million Over 11 Years

For 10th straight year, Virginia Beach earns perfect triple-A bond rating

Thursday, July 18, 2019

The City of Virginia Beach has saved taxpayers $4.4 million by refinancing $60.5 million in outstanding Series 2009A and 2009B General Obligation Public Improvement Bonds (GOPI) and 2010A-2 (taxable) GOPI Build America Bonds, loans that funded various roads, schools and other capital projects. The City's outstanding triple-A bond ratings helped make the savings possible.

On June 4, 2019, the Virginia Beach City Council authorized a GOPI bond sale with a maximum principal amount of $185 million comprised of new money issuance of up to $117 million and refunding of up to $68 million to refund the City's outstanding Series 2009A and 2009B and 2010A-2 GOPI bonds. On July 10, the City sold $101.2 million in new money and $54.9 million in refunding GOPI bonds. The refunding resulted in debt service savings of $4.4 million over 11 years, and on a present value basis resulted in $3.8 million savings, or 6.4 percent of the refunded bonds.

Nine electronic bids were received from various investment banking, securities brokerage and financial services firms on the new money and refunding GOPI bonds. The bonds were awarded to Morgan Stanley & Co., LLC at a true interest cost of 2.106266%.

"Given favorable market conditions and the City's triple-A bond rating, the City sold bonds at the lowest rate ever for GO bonds and for refunding bonds for the city," stated Interim Director of Finance Alice Kelly. "Maintaining triple-A ratings allows the City to receive the lowest rates, which in turn saves the taxpayers money."

Three major rating agencies affirmed the City's triple-A rating with stable outlooks and were highly complimentary of the City's financial management strength:

  • Moody's Investors Service:  Moody's cites a "conservative and proactive budget management" in assigning its triple-A rating.
  • Standard & Poor's:  S&P characterizes the City's management conditions as "very strong management," with "strong" financial policies and practices.
  • Fitch Ratings: In the key rating drivers, Fitch describes financial management as "sound" with superior level of inherent budget flexibility.

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