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FOR IMMEDIATE RELEASE
July 23, 2003

 

BOND-RATING AGENCY UPGRADES ASSESSMENT
OF
CITY FINANCES

 

          One of the nation’s leading independent bond-rating agencies has upgraded Honolulu’s already strong credit rating, citing strong financial management and low debt levels.  Moody’s Investors Service raised the City’s credit rating to Aa2, placing Honolulu in the top 15 percent of more than 18,300 cities whose finances it monitors on an ongoing basis.

          The upgrade sends a clear signal of confidence to investors as two other bond-rating firms, Standard and Poor’s and Fitch, have reaffirmed Honolulu’s strong ratings of AA- and AA respectively.

           “There is no better assessment of a city’s management and financial condition than the independent national bond raters,” said Ivan M. Lui-Kwan, Director of the Department of Budget and Fiscal Services.  “They carefully review all aspects of a city’s operation, free from local politics, and issue their rating of its financial condition and credit worthiness.  They have studied Honolulu and we are ‘AA’.”

          All three agencies cited similar evidence in support of Honolulu’s strong bond rating:

 

·        City maintained financial stability despite the economic weakness of the 1990s.

·        Cost containment through organizational restructuring, privatization and workforce reduction.

·        Expectation of continued strong financial management with adequate fund reserves.

·        Low debt burden.

           Honolulu is the largest city in the U.S. to receive a rating upgrade from Moody’s on its general obligation bonds since the 2001 recession.  Only four of the top 11 cities in Honolulu’s peer group (ranked by population) have bond ratings of Aa2 or higher.  Cities with lower ratings include Detroit, Chicago, Houston, New York and Philadelphia.

           The continued strength of Honolulu’s bond rating is seen as especially significant because it runs counter to the national trend.  According to Citigroup Global Markets, Inc., six times as many cities have been downgraded as upgraded during the first six months of 2003.

          Moody’s also noted the city’s economic development initiatives and low debt levels in its favorable report.  “Hawaii remains a unique and attractive tourist destination and officials have been successful in niche marketing the island.  Examples include sports- and eco-tourism,” it said.  The report also said that Honolulu’s “debt burden measures compare favorably to other cities and counties in the U.S. with overall debt representing only 1.8 percent of fiscal 2004 taxable values.”

           “It’s gratifying to know that the experts look favorably on our financial performance,” said Mayor Jeremy Harris in reaction to the news.  “Their independent and unbiased assessment of City finances is a strong vote of confidence in our continuing effort to exercise fiscal discipline as we strengthen City services.  It’s a clear indication that Honolulu’s financial position is fundamentally strong.”

 

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Wednesday, July 23, 2003

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