The Virginia Public School Authority issued $135.8 million in bonds to finance improvements at schools in a northern county.
The bonds mature between 2024 and 2043, yielding between 3.53% and 4.78%. They received a rating of AAA from Fitch Ratings, Aaa from Moody’s Investors Service, and AAA from S&P Global Ratings.
Fitch analysts wrote that they expect Prince William County “to maintain a high level of financial flexibility given its solid operating performance, healthy available fund balance, and moderately low liability burden.”
The authority will use the bond proceeds to purchase a general obligation school bond issued by the county, which will use money from the sale to fund various capital improvements at its schools.
Inflation has driven up the cost of construction in northern Virginia, requiring the country to borrow more money to finance it—and to pay more to service the debt, as the Federal Reserve keeps interest rates high to combat that inflation. Prince William County Schools will need to issue about $674 million more in debt than it had planned over the next decade, according to the school board’s finance department. As a result, the county will pay an additional $82 million in debt service.
Still, county officials are confident they can issue more debt while maintaining a vaunted AAA bond rating, including by staying below a 10% cap on debt service as a percentage of revenue. The county recorded $130 million in governmental activities operating revenue last year.
Prince William County is Virginia’s second most populous. The bonds are special obligations of the Public Schools Authority, secured by bond payments by the county.
Citigroup Global Markets Inc served as underwriter on the issuance.