City receives better rating for its bonds

Advertiser Staff and News Services

A higher credit rating issued this week could save Honolulu about $800,000 to $2 million over 15 years, city officials said yesterday.

The city plans to sell $250 million in bonds next week to pay for capital improvements, including parks and roads. In advance of the sale, Moody's Investors Service raised its ratings on the bonds to AA2 from AA3 to reflect the city's healthier economic performance.

Earlier this week, Fitch Ratings assigned the bonds an AA rating, its third-highest level; Standard & Poor's gave the bonds its fourth-highest rating, AA-.

The three bond-rating firms were hired by the city to evaluate the risk for lenders.

Ivan Lui-Kwan, director of Honolulu's budget and fiscal services, said Moody's AA2 rating was the city's highest in 10 years. The better the rating, the less the perceived risk and the lower the interest that must be paid to attract investors.

About $145 million of the money is being used to refinance debt. The remaining $105 million will finance projects such as road and sidewalk improvements, bike paths and public-safety improvements.

"We're hoping what would happen through the sale itself is a reduction in the interest rates, principally because of the strong financial performance of the city," Lui-Kwan said.

The city also plans to sell $150 million worth of general obligation debt annually for a few years.

After the sale, the city will have about $2.01 billion in outstanding debt, Standard & Poor's said.