WASHINGTON - Standard & Poor's and Moody's Investors Service reaffirmed Virginia's triple-A ratings ahead of today's planned sale of $134 million of general obligation bonds.
The fixed-rate bonds will be sold in two series. The $125 million of series A bonds will finance education and recreational facilities and will refund some 2004 GO bonds. The $8.7 million of series B bonds will refund some 2001 GO bonds. The state has about $5.9 billion of tax-supported debt outstanding.
Troutman Sanders LLP will serve as bond counsel, and Public Resources Advisory Group will serve as financial adviser.
Tax revenue in the gilt-edged state has declined, leaving Virginia with a $1.7 billion budget shortfall.
Secretary of Finance Richard Brown, released a report May 14 that found April general fund revenue fell 19.7% from the same month last year. General revenue funds are expected to fall 7.3% this fiscal year, according to revised estimate from February. This compares with Gov. Tim Kaine's initial budget estimate of a 4.8% revenue decline.
The revised revenue forecasts could amount to a budget gap of $1.7 billion this fiscal year and $2.2 billion in the fiscal year that will begin July 1. Stimulus funds are expected to ease budgetary pressures, a ratings report from Moody's said. The state expects to receive $1 billion in stimulus funds.
Virginia benefits from strong employment compared with the national average. Unemployment in the state rose to 6.8% in April, while the national rate was 8.9% - and rose last month to 9.4%. Additionally, Virginia's 2008 per capita personal income was the eighth-highest in the nation.
Virginia sold bonds via negotiation in November in difficult market conditions to attract retail investors, state officials said. The fallout from the Lehman Brothers bankruptcy filing forced other triple-A rated states that normally sold competitively, like Georgia and Utah, to issue debt through negotiation this year. Now the market strains have eased, allowing Virginia to finance its bonds with the method that historically offers a better price for the issuer.
"For the most part, a lot of the higher-profile issuers, if the deal isn't extremely large, are opting to come competitively now," said Joseph Paucke, senior vice president at Davenport & Co. Prices for other high quality issuers in the region, like triple-A-rated Wake County, N.C., have eased in recent days, Paucke said, but he expects Virginia to attract reasonable demand.
