Posted on: Wednesday, July 30, 2003
'Healthy economy' helps city bond sale
Advertiser Staff and News Services
The city sold $250 million of bonds yesterday to support improvements in city roads, parks and public safety.
Citigroup Global Markets Inc. led the sale, which includes bonds maturing in 2008 that yielded 2.75 percent and bonds maturing in 2028 that yielded 5.01 percent, according to Bloom-berg data.
The overall average yield paid by the city is about 4.85 percent for all bonds, said Ivan Lui-Kwan, director of the city's budget and fiscal services, who was in New York City to help facilitate sales yesterday.
All of the bonds were sold in about two hours at better than anticipated rates, Lui-Kwan said.
"We were very pleased that not only did we get a good price in the market, but that the bonds were absorbed very quickly," he said.
The city has said that $85.5 million of the proceeds will be used for highway and street work and $15 million will go to public safety improvements.
About $143.5 million will be used to redeem commercial paper, or unsecured debt that typically matures in less than a year.
At least $23 million in bonds were sold to Hawai'i investors and businesses, Lui-Kwan said.
He attributed the strong sales to healthy bond ratings recently issued by several independent agencies.
"The bond sale went extremely well for the city principally because of the the strong credit worthiness of the city," Lui-Kwan said.
Fitch Ratings assigned the bonds an AA rating, its third-highest level, because of the city and county's strong tourism-based economy. Tourism accounts for about one-quarter of Hawai'i's annual economic activity.
Standard & Poor's gave its fourth-highest rating, AA-, because of strong finances in the area and growing property values.
Moody's Investors Service said it raised its ratings on the bonds to AA2 from AA3 to reflect the city's healthy economy.
Lui-Kwan 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.
Following the sale, the state has about $2.01 billion in outstanding debt, according to a statement by S&P. The city also plans to sell $150 million worth of general obligation debt annually for a few years.
