FOR IMMEDIATE RELEASE                             December 6, 2006  

Release No. M-133-06

HONOLULU EARNS IMPROVED AA BOND RATING FROM STANDARD & POOR’S

            The City and County of Honolulu has earned an “AA” bond rating from Standard & Poor’s Rating Services, an upgrade from the AA-minus rating Honolulu previously held since 1999.

            Honolulu had already earned Aa2 and AA ratings from the two other top bond rating institutions, Moody’s and Fitch, respectively. The state of Hawaii has the same Moody’s and Fitch ratings and is still rated AA-minus by Standard & Poor’s.

            The City’s improvement could save money for Honolulu taxpayers by allowing the City to borrow money (through the sale of bonds) at more favorable interest rates.

            “This shows we have been managing the City well, making the best use of our limited resources,” said Mayor Mufi Hannemann. “The upgrade confirms we’re moving the City in the right direction and that we’ve managed to turn things around in less than two years in office.”

            Hannemann noted that the Standard & Poor’s bond raters looked favorably on the City’s doubling of its fiscal stability reserve fund to $10 million. “Some people questioned our proposal to increase the City’s reserve fund last year, a proposal I pushed when I was on the City Council in 1998.  I felt it was prudent fiscal policy then, and now more than ever, we have to start saving again.Now Standard & Poor’s has affirmed that.”

            He also noted that S&P cited Honolulu’s strong visitor trends, recent increases in property values and strong recent financial performance.  The raters noted that Hannemann’s first fiscal year as mayor “represented a significant improvement over the original budget . . . . due to the administration’s focus on expenditure control.”

            The rating service also mentioned the administration’s establishment of monthly budget reviews and said, “Continued attention to such financial controls should provide increased predictability and tighter control over budgets and reserves.”

            The factors cited by the rating service include last year’s cancellation of  $60 million in capital projects and the half-percent general excise tax surcharge that the City will begin collecting in January for a mass transportation project that would bring about “economic growth.”

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Contact:

            Bill Brennan, 527-6928

            Mark Matsunaga, 527-5767