Gov. Ige: Hawai‘i to Save $32.8 M Through GO Bond Sale

Governor David Ige. State of Hawai’i Governor’s Office photo.

The state will be saving $32.8 million following the completion of a $345 million refunding general obligation bond sale, Governor David Ige announced on Friday.

Previously issued at a higher interest rate, the bonds fund construction or the acquisition of public improvement projects like public buildings, elementary and secondary schools, and university facilities.

The Office of the Governor say the lower interest rates are a result of a favorable bond market and increased investor demand as a result of the state’s improved financial outlook.

Standard & Poor’s Rating Service improved Hawai’i’s outlook from “stable” to “positive” recently, with the “AA” or current rating of the state’s financial condition listed as “good.”

Moody’s Rating Service improved the state’s outlook from “stable” to “positive” in October 2015. Fitch Rating has an “AA” rating with a “stable” outlook on the state’s bonds.

There are three rating outlook levels – positive, stable, and negative. According to its consultant’s report, as of early March 2016, Hawai‘i is the only state in the nation to have two “positive” outlooks from the three rating agencies.

In February, Gov. David Ige led the state’s financing team, which included Director of Finance Wesley Machida, in credit rating presentations with S&P, Moody’s, and Fitch.

“We discussed with the rating agencies our conservative fiscal management policies and my focus on addressing and managing the state’s long-term pension and health fund obligations,” said Governor Ige. “We also discussed the need to maintain the state’s reserve fund balances to effectively manage our financial resources. Our goal is to manage our budget to live within our means and to best position the state to withstand future economic fluctuations.”

In its rating report, S&P said the state-projected fiscal 2016 budgetary performance benefits from strong revenue trends that have enabled Hawai‘i to build its cash and reserve balances.

“That could lead us to raise the state’s credit within the next two years,” S&P said.

The favorable outlook improvements by Moody’s and S&P are allowing the state to more effectively market and sell the bonds at the lowest rates possible.

Bank of America Merrill Lynch served as lead underwriter for this offering, with Goldman Sachs serving as co-senior manager for the negotiated refunding bond sale.