Gov. Ige announced today that the State of Hawaiʻi successfully sold $995 million of general obligation (GO) bonds. Proceeds from the sale will be used to finance capital improvement costs such as the acquisition, construction, and improvement of various public buildings and facilities, elementary and secondary schools, community college and university facilities, public libraries, and parks, and other public purposes.
“This bond sale is a critical component of the state's plan to stimulate the local economy by spending on capital projects that will keep many residents working while delivering needed improvements to our public facilities,” said Gov. Ige.
The successful sale of nearly $1 billion of state general obligation bonds to a broad range of domestic and international investors speaks to continued confidence in the long-term prospects of the state.
The state used video conferencing to engage Fitch, Moody's, and Standard & Poor’s in the credit ratings process and presentations that were led by Gov. Ige. The ratings effort culminated with Fitch and Standard & Poor's maintaining their ratings of AA+ with a negative outlook for the state's general obligation bond debt. They cited the state's increased reserves and control over a broad array of budget balancing options and the state's strong financial position and management's well-established, proactive budget monitoring practices, respectively. In assigning a revised rating of Aa2 with a stable outlook Moody's acknowledged the state's strong financial governance practices and noted the impact of the coronavirus pandemic on the state and its tourism industry.
Craig K. Hirai, the director of finance who is responsible for state budgeting and financing programs stated, “The state's considerable efforts to implement prudent fiscal policies and programs and build state reserves positioned us to better navigate the current fiscal environment. Hawaiʻi’s collective efforts have been recognized by the credit rating agencies and were further validated by investors.”
The state engaged in extensive marketing efforts of the bonds that included investor presentations held via video conferencing as well as the use of international disclosure language in the preliminary official statement that allowed the syndicate to market the transaction to international investors. Over 72 investors placed orders and the state received international interest from Europe and Asia. The state's strong credit and long-term strength appealed to a large range of buyers. A strong market and substantial demand for the state's bonds facilitated the state's achievement of extraordinarily low rates.
The $995 million of new money 2020 FZ Series GO bonds have maturities ranging from 2025 to 2040. The bonds were issued at a historically low all-in true interest cost of 1.90%.
BofA Securities served as lead underwriter, Morgan Stanley served as co-senior manager, with Citigroup and Goldman Sachs serving as co-managers for the offering.