Bond refinancing saves Honolulu taxpayers nearly $44 million


Bond refinancing saves Honolulu taxpayers nearly $44 million
City successfully sells General Obligation Bonds at low interest rates

The City and County of Honolulu today successfully sold approximately $888.635 million of tax-exempt and taxable General Obligation Bonds, the majority of which will be used to refinance existing debt and save taxpayer money, with the rest going to finance new capital improvement projects. 

The average interest rate on the tax-exempt bonds for new projects is 3.39 percent, the second lowest rate in modern history. 

The Caldwell Administration took advantage of low rates to refinance more than $504.950 million of existing General Obligation Bonds, which will save Honolulu taxpayers over $43.9 million in gross debt service.

Over $2.9 billion of orders were received for the bonds, a record amount for the City and County of Honolulu.  Strong demand resulted from the city’s comprehensive investor outreach effort.  This included an internet based presentation viewed by more than 20 major institutions.  City officials conducted meetings and conference calls with institutional investors and retail advisers in Hawaii. 

Bank of America Merrill Lynch served as the lead underwriter for the offering with Piper Jaffray & Co. as the co-manager.  A one-day retail order period generated more than $303 million of orders including $54 million from Hawaii investors. Local financial institutions were active participants in the bond issue.

Fitch Ratings and Moody’s Investor Services affirmed the city’s existing general obligation bond ratings at “AA+” and “Aa1” respectively — both with “Stable” outlooks.

Fitch stated that “Honolulu’s strong financial position is supported by good reserve levels, balanced operations, and demonstrated revenue flexibility.” 

Moody’s said, “The City’s Aa1 rating reflects its very large property tax base and emergence from the economic downturn with key credit factors not only intact, but improved…and prudent fiscal management demonstrated by conservative budgeting practices and recently improved reserve levels.”

Note: None of these bonds are related to the rail project.

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