FOR IMMEDIATE RELEASE                                   August 22, 2006

CITY SEWER BOND SALE DRAWS FAVORABLE RATES

            The City and County of Honolulu successfully sold $340.76 million of tax-exempt wastewater system revenue bonds, Series 2006 A, B, and C, in New York today (August 22, 2006).  The yields (interest rates) for the bonds were at or near historical lows, with an all-in interest cost of only 4.58 percent.      

            The 2006 Series A bonds will finance $190.88 million of new capital improvements for the City’s wastewater system. Another $149.88 million of the total bond sale will be used to refinance bonds previously issued at higher rates.

            Bond investors expressed their confidence in the City by placing initial orders for over $474 million for the bonds.  In-state retail investors placed approximately $40 million of these orders.  Honolulu’s bonds attracted a diverse buyer base, with investors from across the country, representing a wide range of buyer segments.

            “As a result of the healthy demand for our bonds and favorable market conditions, the City lowered the yields on most of the bonds from initially anticipated levels, thus further saving dollars for Honolulu sewer fee rate payers,” said Mary Pat Waterhouse, director of the City Department of Budget and Fiscal Services. “In addition, the favorable interest rates gave the City an opportunity to refinance more of our outstanding bonds than we had originally planned.”

            The refinancing will save more than $6.7 million for Honolulu sewer customers.

            During today’s sale, the firms of Fitch, Moody’s and Standard & Poor’s affirmed their previous AA-, Aa3 and AA- ratings, respectively, of the City's wastewater system revenue bonds. Bonds rated in the AA-/Aa3 category are judged to be high quality by all standards. In affirming the ratings, the firms expressed confidence in the City’s ability to manage its extensive capital program.  Further, the rating agencies affirmed their belief that the City’s financial position remains sound with sewer rates that are considered affordable relative to its peers.             

            UBS Investment Bank was the underwriter on the bonds. Municipalities, states and businesses borrow money by selling bonds. The purchasers are repaid with interest, using future revenues. In this case, those revenues are the sewer fees that the City collects. The interest on the wastewater bonds Honolulu sold today is exempt from state and federal taxes. Maturity periods will range from one to 30 years.

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Contact:

            Mary Pat Waterhouse, Director, Department of Budget and Finance, 523-4617

            Edlyn Taniguchi, Chief of Treasury, 527-5673