WASHINGTON - Prince George's County, Md., today will bring to market $110 million of general obligation public improvement bonds after receiving its first-ever triple-A rating.
Standard & Poor's assigned a AAA to the suburban-Washington county's $110 million of Series 2008 GOs and raised the county's $970.9 million of outstanding GOs to AAA from AA-plus.
Moody's Investors Service rates the deal Aa1 with a stable outlook. Fitch Ratings rates the county AA-plus with a stable outlook. Moody's affirmed its Aa1 rating on the county's outstanding GOs, and Fitch affirmed its AA-plus rating on the outstanding debt.
The county's Series 2008 bonds and GO debt are secured by the county's full faith and credit GO pledge.
Standard & Poor's analyst Danielle Leonardis said the county has weathered several economic cycles to achieve the highest rating, adding that Prince George's County has demonstrated an extended track record of strong management.
While the county operates under property tax limitations that have precluded rating upgrades in the past, Leonardis said county officials found ways to generate additional revenues.
County executive Jack Johnson said the voter-mandated property tax rates are held at 96 cents per $100 of assessed value for real property.
Johnson said revenues from other taxes and fees mitigated the effect of the tax levy limit. Leonardis added that the county's ability to curb expenditures "whenever necessary" also contributed to the upgrade.
Proceeds from the 2008 bonds will be used to finance various projects, including roads, bridges and county buildings, such as fire stations and police stations. The largest portion, about $46.5 million, will finance 16 school infrastructure projects, Johnson said.
Standard & Poor's also noted the county's "substantial and continually diversifying local economic base," as well as its moderate debt burden. A $1.94 billion capital plan calls for about 50% to be financed through future GO issuances.
Standard & Poor's stable outlook reflects the agency's expectation that management will be able to successfully manage Prince George's County's sizeable growth and the further diversification of its economy, while maintaining the county's strong financial position despite operating under the tax levy limitations.
Challenges to the rating reflect the problems that most counties are facing from subprime mortgage-related woes.
"Right now, in all Maryland counties, recordation and transfer taxes are a major component of county budgets, and so we'll continue to monitor that, given the economic nationwide housing slowdown," Leonardis said. "We're just going to make sure that they're on track to maintain reserve levels and benefit from the growth that's going on."
Prince George's County joins Maryland's Howard, Montgomery, Anne Arundel, and Baltimore counties as counties that are also triple-A rated by Standard & Poor's, Leonardis said.
Public Advisory Consultants Inc. of Owings Mills, Md. is financial adviser on the competitive deal. Meyers Rodbell and Rosenbaum PA and Marcell Soloman & Associates PC are co-bond counsel.
Prince George's County issues GOs about once per year, in late spring or early summer, Johnson said.
The county last went to market on June 5, 2007, when it sold $222.9 million of GOs. Merrill Lynch & Co. was the winning bidder with a true interest cost of 4.3163%.