Moody's Reaffirms City's Bond Rating But Assigns Negative Outlook

Moody’s Investors Service announced Thursday that Alexandria’s bond rating is among the 161 local government ratings that received the service’s top mark, but also assigned a negative outlook because of the city’s financial relationship with the federal government.

The counties of Arlington, Fairfax, Loudoun and Prince William as well as the towns of Herndon and Vienna also had their ratings reaffirmed but with the negative tag.

According to a city release, the rating action “was based on the characteristics that these local governments shared as a group and will be followed by separate case-by-case reviews of each affected jurisdiction.”

City staff will work with Moody’s on its review of Alexandria’s bond rating in the near future.

“While the federal government is a major economic presence in the regional economy, we feel that the City’s location inside the Beltway, the diversity of our economy in general, and the particular types of federal agencies located here, including the fee-supported Patent and Trademark Office, will help us through the coming federal budget cutbacks,” Acting City Manager Bruce Johnson said in the city release. “Also, we believe Moody’s should recognize that Alexandria, with our consistently balanced budgets, well-funded reserves, conservative fiscal management, and low debt burden, should be distinguished from being placed into the same classification as the federal government.”

The city said it doesn’t plan to issue bonds until next summer. Just before Moody’s review in July, Alexandria issued $69.95 million in AAA/Aaa general obligation bonds at an interest rate of 3.18 percent.

Moody’s announced its intent to review the credit ratings of local governments in light of the debt-ceiling issues on Capitol Hill.

President Obama signed into law a measure to raise the country’s debt ceiling on Tuesday.

Last Friday, Alexandria Mayor Bill Euille and several other Northern Virginia mayors and chairs of city and county governments  of Moody’s Investor Service’s intent to review the bond ratings.

The statement said, in part: “Northern Virginia does not have a debt problem, the federal government does. The continued inaction and partisan bickering over the very high amount of debt the federal government is carrying and how to deal with it is putting at risk the credit ratings of our Northern Virginia localities.”