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Lexington gets double‑A ratings, plans spring bond sale to fund capital projects
Summary
Financial advisers and rating agencies assigned Lexington double‑A credit ratings; city staff and Davenport outlined a planned bond sale in March to fund capital projects and described expected interest‑rate ranges and next steps.
Lexington officials on Feb. 13 reported that national credit agencies assigned the city double‑A ratings and that the city and its financial advisor plan to sell general‑obligation bonds in March to finance capital projects approved in the capital improvement program.
David Rhodes of Davenport presented the results of the rating outreach and described the planned timetable for a competitive bond sale. Rhodes said the rating agencies cited Lexington’s structurally balanced budgets, a robust unassigned fund balance (a “rainy‑day” fund), and the presence of strong local institutions — Washington and Lee and VMI — as positive credit factors. He said the city’s small size is a limiting factor but that the overall view was “credit worthy” with double‑A ratings from the two agencies the city approached.
Rhodes and staff described the plan to offer bonds competitively in March with the expectation, if market conditions hold, that the all‑in interest rate could be in the mid‑3% range; staff have modeled higher rates for budget prudence. City staff said they will present a resolution at an upcoming meeting to authorize a “not to exceed” borrowing (the city manager indicated the next agenda would include a resolution to authorize issuance of up to $23,000,000 at an up‑to 5.5% interest ceiling to preserve flexibility).
City Manager Tom Carroll and Finance Director Jen (surname not specified in transcript) said the competitive sale will be public, that staff will return with final numbers after bids are received, and that the city may scale the final issuance to market pricing. Rhodes explained mechanics of municipal bond bidding, premiums/discounts and how larger sale sizes can attract a broader investor base.
Rhodes told council the rating reports emphasize Lexington’s strong budgetary policies and the city’s healthy fund balance, and he said the recommendation to issue fixed‑rate debt was deliberate. City staff said proceeds will fund projects in the capital program, including utility and facility work; final project lists and the exact issuance amount will appear on a future council agenda. No borrowing resolution was adopted at the Feb. 13 meeting; council will consider authorization at a future meeting.
