S&P raises Hawai'i bond rating
Bloomberg News Service
Hawai'i's improved economy and budget surplus earned it a higher credit rating from Standard & Poor's before the state's largest bond sale of the year.
"Hawai'i's economy continues to recover from a downturn in the 1990s, when a recession in California and Japan's economic slump hurt tourism and the state's real estate market," Standard & Poor's said.
The credit rating company raised Hawai'i's bonds one notch to AA- from A+, affecting $3.3 billion of general obligation bonds. Hawai'i plans to sell $460 million general obligations in early August, its biggest issue this year.
The state's unemployment rate, which stood at 6.6 percent in March 1997 when S&P last downgraded Hawai'i, dropped to 4.3 percent by May of this year. Increased tourism and construction also filled the state's coffers with more tax revenue, with a projected $100 million surplus for the fiscal year that ended June 30, S&P said.
Moody's last year raised its rating on the state's general obligations to Aa3 from A1.
The latest upgrade "will definitely be a plus" for next month's sale, said Philip Fang, who helps to manage about $70 million in the Lord Abbett Hawaii Tax-Free Income Fund. Upgrades often reduce borrowing costs for governments because investors are willing to accept lower interest rates for an improved credit.