STATE COMPLETES SALE OF $437.4 MILLION OF GENERAL OBLIGATION BONDS
For Immediate Release August 21, 2003
HONOLULU – Governor Linda Lingle announced the State of Hawai`i sold $437.38 million of General Obligation Bonds at a true interest cost of 4.43% this morning. This rate, one of the lowest borrowing rates for the State in the past 10 years, reflects increased confidence in the State’s economic recovery and strong financial management. A portion of the sale will refund outstanding bonds to provide the State with $6.7 million of present value savings.
The bond sale caps a successful credit review process that saw three independent rating agencies—Moody’s Investors Service, Standard & Poor’s, and Fitch Ratings—assign Aa3/AA-/AA- ratings, respectively, to the State’s bonds after meetings hosted by the Governor and key department directors and staff in Hawai`i earlier this month. The Governor also met with the rating agencies in New York in February.
In its analysis, Standard & Poor’s commented that “Hawai`i’s economy is performing well, with positive job growth trends, in contrast to other states.” Moody’s Investors Service cited the Lingle Administration’s sound financial management in its report, stating that “conservative budget controls position (the) State well to manage economic downturns.” According to data from Moody’s, only 15 percent of municipal bond issuers have higher ratings than Hawai`i.
The Governor noted that maintaining the State’s ratings and stable outlook during a nationwide economic recession was particularly significant. Fourteen U.S. states and territories have been downgraded since 2001, and 21 currently carry a negative outlook.
“The State’s success in maintaining our ratings and stable outlook, and the sale of our bonds at a favorable rate, demonstrates Wall Street’s confidence in our State as well as our sound fiscal practices,” said Governor Lingle.
The State’s bond sale was warmly greeted by investors. Retail demand for the bonds was particularly strong both nationally and at the State level, with over $92 million of bonds purchased during the initial retail order period. This amount of retail participation is believed to be the largest amount for a State of Hawai`i general obligation bond sale. The strong retail response was followed by equally strong participation from a broad array of institutional investors. These investors included insurance companies, bank trust departments, corporations and some bond funds.
The proceeds from the bond sale will also be used for improvements to public buildings and facilities including elementary and secondary schools, community college and university facilities, public libraries and other public purposes. The bonds were underwritten by a syndicate comprised of Citigroup Global Markets Inc. and UBS Financial Services Inc.
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For more information, contact:
Georgina Kawamura
Director, Budget & Finance Dept.
Phone: 586-1518
Lenny Klompus
Senior Advisor – Communications
Phone: 586-7705
Russell Pang
Chief of Media Relations
Phone: 586-0043
