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Honolulu is planning to raise $257.1 million through the sale of general obligation bonds. The funds will be used to support the city’s 2024 capital improvement program and the ongoing construction of the Honolulu Authority for Rapid Transportation’s rail project.
The city aims to offer these bonds to local Hawaii investors during a special two-day retail order period. The series of 2023 GO bonds will be used for major projects, including the nearly $10 billion Skyline route and the city’s $1.34 billion-plus CIP budget for the current fiscal year.
Orders for the bonds will be taken from all buyers, including Hawaii investors, and the city’s underwriter will determine which orders are completed. This provides retail investors with an attractive opportunity to purchase the city’s GO bonds and increase the volume of buy orders.
The proceeds from the bond sales will be used to fund the city’s CIP and equipment budgets as needed. It’s important to note that the bonds are not directly tied to specific projects or parts of the rail line. Instead, they will act as bridge financing for the overall rail construction.
In anticipation of the bond sale, the city received a strong AA+ credit rating from Fitch Ratings Inc. and S&P Global ratings. These ratings will enable the city to issue general obligation bonds at favorable interest rates and maintain lower debt service costs.
Mayor Rick Blangiardi praised the city’s credit rating report, highlighting the collaborative efforts of various departments and boards. The rating agencies emphasized the stable revenue base, diverse economy, high median income, low unemployment, and responsible fiscal policies as the basis for their ratings.
While the city’s creditworthiness remains strong and stable, it faced a bond rating downgrade earlier this year. Moody’s downgraded the city’s bond rating from Aa to Aa2, citing a bond rating methodology change. However, city officials are confident in their financial position and are focused on regaining their previous ratings.
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