Public to Benefit from Sale of $300.9 Million in Airport Revenue Bonds

The State Department of Transportation, Airports Division, has successfully sold $300.885 million of revenue bonds that will provide over $27 million in present value savings and reduce annual debt service payments by up to $19.6 million each year through 2020.  The refinancing and loan restructuring gives the Airports Division greater flexibility to proceed with its on-going capital improvements program.

“With this type of fiscal diligence we are transforming government and helping to improve our economic outlook moving into the future,” said Governor Neil Abercrombie. “The extra efforts of our financial team from the Departments of Transportation, Budget and Finance and Business, Economic Development and Tourism were able to generate substantial savings that will not only benefit the Airports Division, but also our airline partners and all airport users.”

The Administration implemented a strategy to generate investor interest and demand for the $300.885 million in Refunding Revenue Bonds, which the State issued in order to refinance the outstanding Series 2001 Airports System Revenue Bonds.  The State’s marketing efforts resulted in over $750 million of orders.  This high demand allowed the State to reduce interest rates on the Bonds to 3.61%, down from the previous average interest rate of 5.49% on the outstanding 2001 bonds.

“Our financing strategy incorporated new methods of communication such as internet-based investor presentations, direct meetings with local investors and conference calls with national investment firms,” said Kalbert Young, state Director of Budget and Finance.  “We also structured a team of multiple underwriters to showcase the strengths of the Airport Bonds to great success.”

Moody’s Investors Service, Standard & Poor’s Ratings Service and Fitch Ratings affirmed the Airports Division’s bond ratings (i.e. ability to repay debt) of A2, A and A, respectively, each citing a stable outlook.  Moody’s stated that the Airports Division’s “Strong current financial position with low debt and high liquidity provides the airport financial flexibility.”  Standard & Poor’s assessment noted “Moderately low overall debt combined with a good mix of capital program funding sources.”  In addition, Fitch wrote of the Airports Division’s “Natural monopoly providing essential air passenger service.”

“The savings generated by this refinancing will be beneficial as we continue forward with the Airports Modernization Plan by increasing savings while keeping costs as low as possible,” said state Transportation Director Glenn Okimoto.  “A lot of the credit for this successful refinancing goes to Ross Higashi, the Airports Division Fiscal Management Officer. It was through his guidance and hard work that the bond refinancing was a success and completed in two months, half the time these types of projects normally require.”

Bank of America Merrill Lynch and Piper Jaffray & Co. served as co-senior managers for the bond sale with RBC Capital Markets and Siebert Brandford Shank & Co., L.L.C. serving as co-managers.