Honolulu Pockets $346 Million from General Obligation Bonds

Today, Wednesday, July 22, 2020, the City and County of Honolulu successfully sold $346 million of general obligation bonds. The bond proceeds will be used to finance various City projects, equipment purchases, improvements to the H-Power waste-to-energy facility, and to refinance the outstanding Series 2010A Build America Bonds.

“I want to thank Budget and Fiscal Services Director Nelson Koyanagi for his and his team’s hard work in putting the City and County of Honolulu in such strong financial position,” said Mayor Kirk Caldwell. “This led to an historically low interest rate in a pandemic environment.”

The average interest rate on the City’s new money Series 2020C bonds was 2.46%, one of the City’s lowest borrowing costs in modern history for a 25-year financing. In addition, the City will realize $18.44 million of debt service savings by refunding the Series 2010A Build America Bonds.

Fitch Ratings affirmed the City’s general obligation bond rating at “AA+” with a “stable” outlook. In their credit report Fitch cited the City’s, “solid revenue framework, which is dominated by stable property taxes, low long-term liabilities and robust operating performance.”

Moody’s Investor Services also affirmed the City’s general obligation bond rating at “Aa1.” Despite revising the outlook to “negative,” in their credit report Moody’s cited the City’s, “solid history of prudent fiscal management,” as one of the primary reasons for maintaining the Aa1 rating.

The City received over $275 million in orders during a one-day retail only order period on July 21, including a number of orders from Hawaii-based investors. The offering was also well received by institutional investors who submitted an additional $928.68 million of orders for the bonds. Strong demand was the result of the City’s comprehensive investor outreach effort, which included a retail advertising campaign in Hawaii, as well as an online investor presentation for institutional investors.

The City’s general obligation bond offering was the first municipal bond offering in Hawaii since the onset of the pandemic. The strong reception from investors reflects their long-term confidence in Hawaii, and specifically Honolulu.

BofA Securities, Inc. served as the lead underwriter for the offering with Piper Sandler & Co. and Stifel as the co-managers.