KAILUA-KONA — The state has sold more than $200 million in highways revenue bonds, of which $22 million are headed to the Big Island, the governor’s office announced Monday.
“The money will be distributed to projects that will benefit communities throughout the state, including more than $22 million for Hawaii County, for improvements on the Akoni Pule Highway, Mamalahoa Highway, Kohala Mountain Road, Daniel K. Inouye Highway and Kawaihae Road,” wrote Tim Sakahara, public affairs officer with the department of transportation.
Approximately $120 million of the bond sale proceeds will be used to fund various highway projects throughout the state and about $127 million of the proceeds will be used to refinance existing state bonds, the office wrote. The refinancing will reduce debt service payments and save more than $22 million in interest costs.
The sale raised $247.58 million on $204.49 million in sales and brought in the lowest rates in the history of the Highway Revenue Bond Program, which began in 1993.
“This financing is a tremendous success for the state, enabling continued investment in our infrastructure at a very affordable borrowing cost,” Gov. David Ige said in a press release.
“The low interest rates achieved demonstrate bond investors’ confidence in Hawaii’s economic strength and its continued practice of sound fiscal management. This is the result of years of discipline and conservative fiscal management.”
The three major rankings placed the state’s bond ranking in what Investopedia terms a “high-quality investment.”
“Each rating agency also attached “stable” outlooks on their ratings, indicating secure future economic and financial trends for Hawaii. Rating agencies cited the stability and diversity of revenue streams that are pledged as security for the bonds, as one of the key strengths of the credit. Other strengths cited include strong legal provisions, high debt service coverage, and stable revenue trends, particularly in those sectors that are less reliant on economic activity.
The marketing plan for the bonds included investor presentations, both in-person in Hawaii and on the mainland, as well as internet-based presentations and conference calls. The extended marketing generated strong demand for the bonds from institutional investors, the state wrote.
This demand resulted in orders at 4.5 times the amount available, forcing the interest down, the release said. The average net interest was 2.25, with individual rates between 2.5 and .5 percent.
“The success of the recent bond sale and the low interest rate on the offering is due in no small part to the hard work of the Highways Division in adhering to its sound fiscal and debt management policies,” said Ford Fuchigami, director of the Hawaii Department of Transportation. “We are extremely pleased with the demand for the bonds and the needed infusion of capital the Highways Division will receive from the sale.”
The bonds were sold by a financing team led by Robert W. Baird &Co. Incorporated, serving as book-running senior manager and Morgan Stanley and Wells Fargo Securities, serving as co-senior managers.
West Hawaii Today reporter Graham Milldrum contributed to this report
