(The Center Square) – Virginia has secured a ‘AAA’ credit rating from S&P Global for two new bond issues, with analysts citing strong reserves, conservative budgeting and a stable economic outlook.
S&P assigned its highest rating to $72 million in general obligation bonds (Series 2025A) and $97 million in refunding bonds (Series 2025B) that Virginia plans to sell in the coming weeks.
The commonwealth’s GO bonds are long-term debt backed by its full faith and credit—akin to long-term loan. GO bonds are issued by municipalities and states to fund various purposes including infrastructure, schools, and government buildings. Proceeds from the 2025A bonds will support a capital project at Virginia State University. Proceeds from the 2025B bonds will be used to refund existing debt for debt service savings. This is akin to refinancing your mortgage for savings.
“The GO rating and stable outlook on Virginia reflect our view of the commonwealth’s proactive budgetary management, which has helped guide favorable financial performance and comparatively strong balance-sheet metrics,” said S&P Global Ratings credit analyst Oscar Padilla. “The commonwealth’s general credit quality is also supported by a relatively stable and diverse economic base, albeit with a comparatively large share of federal employees and a manageable overall debt and liability profile,” Mr. Padilla added.
A top-tier rating makes both kinds of bonds more attractive to investors and helps Virginia borrow at lower rates, saving money for taxpayers. S&P cited the commonwealth’s nearly $900 million surplus, its revised $3.2 billion revenue forecast, and reserve funds totaling 15.5% of the operating budget for the next fiscal year.
Analysts credited both Gov. Glenn Youngkin’s administration and lawmakers for taking early action to update the budget, fully fund pensions and strengthen reserves. The rating comes as Youngkin prepares to leave office in November, leaving behind what S&P called a well-managed balance sheet and stable outlook.
Virginia’s rating remains among the highest in the nation. While only a dozen states currently hold ‘AAA’ ratings from all three major agencies, neighboring Maryland lost its perfect score in May 2025, when Moody’s downgraded it to Aa1 from Aaa, citing economic and financial underperformance compared to other AAA-rated states.
A spokesperson for the Virginia Secretary of Finance said the Commonwealth “appreciates S&P’s independent validation” of its fiscal strategy, confirming the upcoming bond sale includes funding for a dormitory project at Virginia State University and refinancing older debt to generate savings.
