Arlington investors will get the first shot at buying county bonds for the first time.
The move will allow the county to diversify its investor base, said Board Chairman Barbara Favola. The county has also been getting requests from citizens to buy Arlington bonds for some time, said management and finance director Mark Schwartz.
“Local citizens want to be able to invest in their communities,” he said. “[It] diversifies the number of people that will hold Arlington County bonds.”
As orders from retail investors come in, priority will be given to Arlington residents, identified by ZIP code, and then other Virginia and national investors. If all the bonds are not sold during the retail order period — likely in early July — the remaining bonds will be sold through the traditional competitive process the following day.
The county will work with underwriting firms to advertise the bond sales and order period. The bonds are sold in $5,000 increments, Schwartz said.
Other issuers, like the states of Maryland and Delaware, as well as the Metropolitan Washington Airports Authority, have also used this approach for bond sales. The crumbling of the financial markets last fall has been a major catalyst for the new approach to selling bonds, according to Schwartz.
“It was something that hasn’t really happened until the collapse,” he said.
Historically, the county’s bonds have been sold to giant purchasers such as insurance companies and mutual funds, said county spokesperson Diana Sun.
Schwartz explained that two years ago, the county would have sold bonds to a large company, which would have immediately turned around and sold them to another brokerage firm, and so forth.
In contrast to institutional investors, retail buyers typically accept lower yields and are less sensitive to early redemption provisions, officials said.
“They’re not in it just for the maximum possible dollar value,” Schwartz said.
