Posted on: Friday, October 22, 2004

State bond sale draws strong response

By Deborah Adamson
Advertiser Staff Writer

Hawai'i's $225 million municipal bond issue, which received a high credit rating, met with strong demand from investors after hitting the market yesterday.

"We had a really good reception," said Scott Kami, administrator of the Financial Administration Division at the state Department of Budget and Finance. "Demand for the bonds was very strong. Hawai'i has a good standing in the market."

Proceeds from the general obligation bonds, rated AA- by the major credit-rating agencies, will be used to finance capital improvement projects, such as schools, libraries and parks.

The yield on the bonds ranges from 2.66 percent to 4.3 percent, depending on their maturities, which run from five to 20 years. The bonds are free from federal and state taxes. The longer-dated bonds will be callable beginning Oct. 1, 2014.

Stan Donelson, an 81-year-old retiree in Kane'ohe, is interested in buying the bonds to boost his interest income.

"I just thought it would be something to put my money in instead of leaving it at the bank," he said. "They pay less than 1 percent on savings. If I put it in a lock box and keep it there, it won't make much of a difference."

The bonds are sold in $5,000 increments. Brokers with local branches that sell the bonds include Smith Barney, a unit of Citigroup, which led the underwriting syndicate for the bonds; Merrill Lynch; A.G. Edwards; UBS Financial; Wachovia Securities; and Morgan Stanley.

For the fiscal year ending next June 30, the state Legislature has approved issuance of $450 million in general obligation bonds. The state currently has $3.96 billion in outstanding general obligation bonds.