07/25/22 City receives “stable” outlook, sells nearly $100 million in General Obligation Bonds

City receives "stable" outlook, sells nearly $100 million in General Obligation Bonds

The City and County of Honolulu received an "AA+" and "Aa1" rating from Fitch Ratings and Moody's Investor Services respectively

HONOLULU - On July 19, 2022, the City and County of Honolulu successfully sold $97.455 million of General Obligation Bonds to the public. The bond proceeds will be used to finance various City projects and equipment purchases.

The average interest rate on the City's new money Series 2022B and C bonds was 3.59%.

"This year's successful bond sale reflects the hard work and dedication of the Budget and Fiscal Services Finance Team and the Honolulu Authority for Rapid Transportation" said Mayor Rick Blangiardi. "Our bond rating agencies and bond investors have expressed their confidence in the City's capabilities to manage its finances. I would like to extend a sincere thank you to our lead underwriter, BofA Securities, for their excellent work in a municipal bond market in turmoil due to historical inflationary pressures and geopolitical instability due to the war in Ukraine."

Fitch Ratings affirmed the City's General Obligation Bond rating at "AA+." 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." The outlook was revised to stable from negative. In their report Moody's cited the City's "massive tax base that has shown health long-term growth as well as the strength and stability of the City's financial profile derived from the tax base. Additionally, management has made significant progress in restructuring the administration of the rail project….thereby reducing contingent liability risks associated with the cost and timeline… We consider governance to be factor driving the outlook revision."

The City received over $124 million in orders during a one-day retail only order period on July 19th, including a number of orders from Hawai'i based investors. The offering also was well received by institutional investors who submitted an additional $54 million of orders for the bonds. Strong demand resulted from the City's comprehensive investor outreach effort, which included a retail advertising campaign in Hawai'i as well as an online investor presentation for institutional investors.

BofA Securities served as the lead underwriter for the offering with Piper Sandler & Co. and Morgan Stanley as the co-managers.

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