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December 9, 2014 Published in City Hall, Top Stories

City Of Alexandria Sells General Obligation Bonds At Historically Low Interest Rate

The City of Alexandria recently sold $36 million in general obligation bonds at one of the lowest interest rates in modern history.  The proceeds of the bonds will be used for schools, parks, Metro and other transportation improvements and infrastructure, and public buildings.  The savings over a higher interest rate is realized over the life of the debt and can be used to fund other programs and services.

"We are very pleased at the exceptional interest rate we were able to achieve on these bonds," said Mayor William D. Euille. "This rate is a reflection of the market’s high level of confidence in Alexandria’s fiscal management and economic health."

On Nov, 20, 2014, the bonds sold at a true interest cost of 2.7191%.  "True interest cost" represents the total cost of the debt, and includes interest payments, fees, and other components.  By comparison, the City issued bonds in 2013 at a true interest cost of 3.27%.  For the 2014 issuance, the City received seven bids ranging from 2.7191% to 2.89%.  The winning bid was from Robert W. Baird & Co., Inc.

Also last month, the Standard & Poor's and Moody's Investor Service, Inc. credit rating agencies reaffirmed the City's "AAA" and "Aaa" credit ratings, respectively.  These ratings describe the City's repayment obligations as being "extremely strong," and "of the highest quality," which signals to investors that purchasing an Alexandria bond has very low risk.  This results in a correspondingly low interest rate, which saves taxpayers significant cost over the repayment period of the bonds.

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