County refinances $118.7 million in bonds, issues $30 million in new bonds
Henrico County issued two sets of bonds for its water and sewer system last week after securing the highest-possible AAA ratings.
The moves will allow the county to make additional improvements while reducing this year’s costs for debt service.
A refinancing of $118.7 million in water and sewer system revenue bonds earned an interest rate of 1.86%, County Manager John A. Vithoulkas said in a letter to the Board of Supervisors.
That will save $14.4 million over the life of the bonds and allowed $30 million in new bonds to be issued “without any negative impact on the system’s operating budget,” he said.
The new bonds earned an interest rate of 2.47%. Vithoulkas called the rate “historically low” when compared with rates of 2.81% and 3.48% secured for bond issuances from 2019 and 2018, respectively.
Between the two sets of bonds, the county expects to save $500,000 on utility system debt service payments in fiscal year 2020-21.
“This is undoubtedly a great outcome for the county,” Vithoulkas said.
The three rating agencies – Fitch Ratings, Moody’s Investors Service and Standard & Poor’s – affirmed AAA ratings for the bonds.
“A long history of conservative long-term planning has enabled the county’s water and sewer system to maintain very strong financial metrics,” Standard & Poor’s said in announcing its rating.
Henrico secured three AAA ratings for water and sewer system revenue bonds for the first time in 2019, when Moody’s upgraded its rating from a previous rating of Aa1. The county has maintained three AAA ratings for general obligation bonds since 1998.
Henrico’s water and sewer system is supported by revenues generated by the enterprise, not by general tax dollars. The system serves more than 99,000 water customers and 96,000 sewer customers.