WASHINGTON - The Virginia Resources Authority next week is poised to issue $73 million of infrastructure revenue bonds under its pooled financing program to fund water, transportation, and other projects for eight localities.

About $50 million of senior Series 2008A bonds and $22.8 million of subordinate Series 2008B bonds - both rated highly for a pooled bond program - will be priced in a retail-order period on Wednesday and institutional pricing will follow on Thursday, VRA officials said.

Moody's Investors Service rates the senior-lien series Aaa and the subordinate series Aa2, both with stable outlooks. Standard & Poor's also rates the senior bonds AAA and the subordinate bonds AA with a stable outlook.

Moody's said in a report that the VRA's "continued growth" and "diversity of the pool," combined with strong program management and oversight practices, is one of the major reasons for its high ratings.

The bonds, which will be sold in a negotiated sale, will fund a variety of infrastructure projects, including water and wastewater projects, public safety, transportation, and dam safety projects, VRA officials said. The largest portion, about $19.9 million, will be used to finance a Frederick-Winchester Service Authority wastewater project. About $17.5 million of the bonds will be used by Rapidan Services Authority and the Harrisonburg-Rockingham Sewer Authority to refund bonds issued in 1997 and 1998.

"Our flexible program has lead to steady loan growth and an expanding number of borrowers," VRA executive director Sheryl Bailey said. "Our cost-effective program has broadened our loan growth." Of the eight borrowers next week, four are new, Bailey said

This latest issuance will bring total borrowing under the authority's pooled financing program to $677 million. The agency now has 57 borrowers in its pool program, Bailey said. .

The VRA created the program in 2003 and it issues debt twice a year, in the spring and fall, she added.

The program provides 1.43 times debt service coverage of the senior-lien series, Moody's said. The program also has a low risk of default, and analysts said that if 31% of the borrowers default on the loan payments that secure the bonds, debt service would still be paid.

The subordinate-lien debt's high ratings are tied to the state's natural triple-A rating and reflect the strength of Virginia's moral obligation pledge, according to Moody's.

The relatively weak credit quality of some of the pool participants is the moral obligation of the state, which provides the basis for the high-grade ratings, Moody's added. The VRA also monitors its borrowers' outstanding debt, and those with the most risk undergo an intensive review by the authority ever year, Moody's said.

Davenport & Co. and Strategic Solutions Center LLC are co-financial advisers for the deal. Lead underwriter on the deal is Morgan Keegan & Co. BB&T Capital Markets Inc., Loop Capital Markets LLC, and Wachovia Securities are co-underwriters. U.S. Bank is the trustee. McGuireWoods LLP is bond counsel.

Bailey said the VRA plans next to issue about $170 million for its clean water state revolving fund program in July, though details are not yet available.


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