Official website of the City and County of Honolulu
 
  You are here:  Main / Customer Services / Public Communications Division / 2012 / 10/25/12 City's General Obligation Bonds Sell at Historic Low Rates
 

CITY’S GENERAL OBLIGATION BONDS SELL AT HISTORIC LOW RATES

 

(Thurs., Oct. 25, 2012)—The City and County of Honolulu today successfully sold approximately $913 million of tax-exempt and taxable General Obligation Bonds at historic low rates, and refinanced older bonds to save taxpayers more than $75 million.

 

The bond proceeds will be used for mandated, required and essential projects and to refinance existing debt. The average interest rate on the tax-exempt bonds for new projects was 3.20 percent, the lowest rate in modern history. The $75 million savings will result from refinancing more than $625 million of General Obligation Bonds.

 

“This is a great day for Honolulu and it will help the City continue to bend the debt curve,” said Mayor Peter Carlisle. “While some other cities have declared bankruptcies, the Honolulu team worked hard to be fiscally responsible during the worst downturn since the Great Depression, which has resulted in extraordinary savings guaranteed through the bond refinancing.”  

 

More than $2.7 billion of orders were received for the bonds, a record amount for the City. Strong demand resulted from the City’s comprehensive investor outreach effort, which included an internet-based presentation viewed by more than 35 major institutions, and in-person meetings and conference calls with institutional investors in Honolulu and on the U.S. mainland. 

 

Investors noted the City’s “strong, stable financial condition” and “remarkably strong financial position with favorable reserve level trends.”

 

Bank of America Merrill Lynch served as the lead underwriter for the offering with Piper Jaffray & Co. as the co-manager. A one-day retail order period generated more than $140 million of orders from individual investors and their advisors. Local financial institutions were active participants in the bond issue.

 

Fitch Ratings and Moody’s Investor Services affirmed the City’s existing general obligation bond ratings at “AA+” and “Aa1” respectively — both with “Stable” outlooks, despite this generation’s worst recession. Fitch stated that “Honolulu’s economy benefits from a resilient visitor industry that has maintained strength throughout periodic downturns . . . . The city’s non-tourism economy is also substantial and balances tourism’s inherent volatility.”  Moody’s said “the Aa1 rating primarily reflects the city’s large economic base . . . sound financial operations with recently improved reserve levels, as well as manageable debt profile.”

                     

-30-

 

Media contact: Louise Kim McCoy, Mayor’s Office, 768-7798.