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$725.3M bond sale to fund projects statewide

MEDIA RELEASE

A revenue bond sale, completed this week, will fund various state capital projects, including public school facilities, University of Hawaii projects and other capital projects statewide. 

The general obligation bond sale will fund capital improvement projects that will bolster Hawaii’s infrastructure and create jobs in the construction and related industries.

The $725.3 million bond sale included $500 million of new money proceeds to fund new capital improvement projects and $225.3 million of refunding bonds to refinance outstanding debt. 

The refinancing of existing debt resulted in a reduction in debt service of approximately $100 million per year in fiscal years 2010 and 2011.

Moody’s Investors Service, Standard & Poor’s Ratings Service and Fitch Ratings affirmed the State’s bond ratings of Aa2, AA and AA, respectively.

Standard & Poor’s Ratings Service cited, as one of the State’s credit strengths, “management’s well-established, proactive budget monitoring practices, including frequent revenue forecast updates from the Council on Revenues, which facilitates prompt identification of potential budget adjustments.”

“The current economic climate posed significant challenges to the state in issuing these bonds. However, we were able to maintain our high credit ratings and our bonds were well-received by the bond market,” Gov. Linda Lingle said of the bond sale, which was completed with an average interest rate of 4.12 percent.

“Attracting this new capital is integral to our plan to create new jobs in the construction and related industries,” she added.

The municipal bond market has stabilized since the market disruption in September 2008. The state’s sale was well received by a variety of investors, with significant demand from retail investors.  

The sale received approximately $200 million in retail orders, many of which were from Hawaii residents.

“The new money portion of the sale was increased in size to $500 million from the $400 million originally planned due to strong investor response and demand for the bonds,” said Georgina Kawamura, state director of finance. “The ability to sell the increased amount of bonds provided the state with an excellent opportunity to borrow additional funds at favorable interest rates.”

The bonds were sold by a financing team with Citigroup Global Markets Inc., serving as senior manager and Merrill Lynch serving as co-manager.

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