Hawai'i to unload $436M in bonds

By Dennis Walters
Bloomberg News Service

Hawai'i plans to sell $436 million in general obligation bonds to pay off higher-cost debt and finance public projects such as schools.

Hawai'i will sell the bonds tomorrow through a group of investment banks led by Citigroup Inc., according to Bloomberg data. Moody's Investors Service rates the state's bonds Aa3, the fourth-highest level, the same level as the AA- grades from Standard & Poor's and Fitch Ratings.

The state's tax collections grew 4.4 percent in the year ended June 30 over the same period in 2002, Moody's said in a report, citing preliminary figures. Hawai'i's tax revenue dropped 3.5 percent in fiscal 2002 because of a tourism slump after the Sept. 11, 2001, terrorist attacks. Tourism generates about one-quarter of Hawai'i's economic activity.

The revenue increase in the latest fiscal year "reflected the strong rebound in general excise and use-tax receipts, resulting from the steady improvement in visitor arrivals" since the terrorist attacks, Moody's said.

Hawai'i carries more debt as a percentage of personal income because the state finances projects, such as schools, that elsewhere in the United States are handled locally.

The state's budget shortfall in the latest fiscal year dropped to an estimated $16.8 million, down from $215 million a year earlier, S&P said in a report. Hawai'i's unemployment rate was 4 percent in July, down from a peak of 5.5 percent two months after the terrorist attacks.