Its top bond ratings continue to help lessen the sting, but the Arlington government (and, ultimately, taxpayers) still will be paying a higher interest rate than any time in the past 16 years for $93.2 million in newly issued debt.
Bank of America on June 18 was the winning bidder in a competitive sale of new county debt, coming in with a low bid of 3.49 percent among 10 firms that took part in the auction, county officials said on July 12.
That realized rate was up ever so slightly from the 3.48 percent received last June when the county government sold $187 million in new bonds to Wells Fargo Bank N.A. And it represents the highest rate the county government has had to pay since 2008, when its bond offering drew an interest rate of 4.05 percent.
The higher interest rate is reflective of current economic conditions, but the county government benefits from its continued AAA bond ratings, which lower the cost of borrowing. Those ratings were affirmed by the three national bond-rating houses – Fitch, Standard & Poor and Moody’s – in the run-up to this year’s debt offering.
Arlington has held the highest possible ratings from the three bond-rating agencies for nearly a quarter-century.
The Arlington government typically sells general-obligation bonds each spring (though there was no sale in 2022). In 2020 and 2021, when interest rates were at rock-bottom levels, the county was able to borrow at rates of 1.8 and 1.89 percent, respectively – likely the lowest cost ever for the county government.
Over the past 35 years, the highest interest rate for a county-government general-obligation offering came in 1989 at 6.71 percent, according to data provided in 2023 by the government’s Department of Management and Finance.
Proceeds from the 2024 sale will support a host of projects approved by voters in a succession of bond referendums. Ultimately, sales of debt trickle down to taxpayers – the county government currently spends about $80 million a year on debt service, or about 5 percent of the total county budget.