Highly rated Arlington County, Va., will come to market with about $190 million of bonds Tuesday, most of which was approved by voters in November.
The bonds, given top grades by all three major credit rating agencies, will be sold on a negotiated basis in three series. The first will be about $94 million of new-money general obligation debt, followed by about $34 million of refunding bonds. The final series will consist of about $61 million of taxable refunding bonds.
Morgan Stanley will be lead underwriter for the first two series, along with Bank of America Merrill Lynch, Citi, and Raymond James & Associates, Inc. Underwriting the taxable bonds will be a different syndicate led by Citi with Bank of America Merrill Lynch and Morgan Stanley.
McGuireWoods LLP of Richmond, Va., will serve as bond counsel for all three series of bonds, while Kutak Rock LLP of Richmond will be underwriters' counsel. Public Financial Management, Inc. of Arlington, Va. will be financial advisor.
The Arlington County Board authorized the bonds March 16 after they were approved by the public in bond referenda in 2008, 2010, and 2012. The new money bonds will be the first series will finance transportation projects, parks, and schools, according to the deal's preliminary official statement.
The tax-exempt refunding bonds of the second series will be used to make refund general obligation debt issued in 2006, 2007, 2008, 2009, and 2011. The taxable debt will refund bonds issued in 2004 and 2006.
Arlington, a city and county with a population of just under 213,000 as of 2012, enjoys a robust economy with very high levels of employment and one of the nation's highest average household incomes by county. The county's largest single employer is the federal government. In rating the county's bonds AAA, Fitch Ratings noted that the federal employment has been a boon but could become a weakness in light of the uncertainty about fiscal policy in Washington.
"The significant presence of the federal government served to insulate the region from economic downturns in the past; however, recent federal budget cuts create some uncertainty," Fitch said. "The presence of the federal government attracts high-wage employment opportunities from information technology, aerospace, defense, and consulting contractors. Very low unemployment, superior wealth levels, and a highly educated labor force underscore the economy."
The county has set aside $4.5 million in reserves to offset any reductions of funding stemming from federal sequestration cuts, and federal revenues account for only 2.3% of the county's 2014 budget.
The bond transactions are expected to close on or about May 9.
