Moody’s Reaffirms City’s Aaa Bond Ratings, But Assigns “Negative Outlook” to Seven Aaa-rated Northern Virginia Localities, Including Alexandria

FROM THE CITY OF ALEXANDRIA:  News Highlights: ·      Moody’s Investors Service announced on August 4 that 161 Aaa-rated local governments, including the City of Alexandria, have had their ratings reaffirmed as Aaa but assigned a negative outlook pending a case-by-case review. ·      This follows Moody’s August 2 announcement that the credit rating for the United States has been reaffirmed at Aaa but assigned a negative outlook.  On August 4, Moody’s Investors Service announced that the City of Alexandria Aaa credit rating, along with those of six other Northern Virginia jurisdictions[1], is among the 161 local government credit ratings reaffirmed at Moody’s top Aaa rating but assigned a “negative outlook” because of indirect and direct financial and economic relationships of these localities with the federal government.   This current rating action was based on the characteristics that these local governments shared as a group and will be followed by separate case-by-case reviews of each affected jurisdiction.  In the coming weeks and months, City staff will be working with Moody’s on its review of the City’s bond rating.  Since the ratings agencies have previously noted the City’s strong and diverse local economy, sound financial management, and moderate-to-low debt burden, the City is confident that it will be able to make a strong case for reaffirming its Aaa rating. Acting City Manager Bruce Johnson stated, “While the federal government is a major economic presence in the regional economy, we feel that the City’s location inside the Beltway, the diversity of our economy in general, and the particular types of federal agencies located here, including the fee-supported Patent and Trademark Office, will help us through the coming federal budget cutbacks.  Also, we believe Moody’s should recognize that Alexandria, with our consistently balanced budgets, well-funded reserves, conservative fiscal management, and low debt burden, should be distinguished from being placed into the same classification as the federal government.”  The City does not plan to issue bonds until next summer, as it issued $69.95 million in AAA/Aaa general obligation bonds at the very low interest rate of 3.18 percent this past July, just before Moody’s indicated that they were going to review the ratings of the 161 Aaa-rated entities. [1] The counties of Arlington, Fairfax, Loudoun, and Prince William, and the towns of Herndon and Vienna.