SAN FRANCISCO -Honolulu has issued requests for qualifications for both municipal bond underwriters and bond counsel firms. Both RFQs are due July 31.
In both cases, the city and county of Honolulu plans to create a list of qualified firms from which it will draw when preparing bond transactions, according to the RFQs.
It's not clear from the RFQs if the solicitations were issued as part of a routine schedule or are related to recent market turmoil. The city's finance director, Mary Patricia Waterhouse, did not return phone messages.
The market's dislocations, however, have claimed the city's favorite underwriter.
Since July 2003, Honolulu has issued $2.5 billion of general obligation and wastewater revenue bonds, and UBS Securities LLC was the manager or co-manager on every transaction, according to Thomson Reuters data. UBS announced in June that it was shuttering its municipal bond department.
The city's fiscal 2009 capital budget calls for the issuance of $380 million in general obligation bonds and $203 million in wastewater revenue bonds.
In 2006, the Honolulu city auditor's office issued a report raising concerns about the practice of relying on negotiated bond issuance, relying on the same underwriters repeatedly, and relying on underwriters to serve as financial advisers.
In the formal response to the audit, Waterhouse questioned the competence of the staff of the auditor's office, said the negotiated sale procedure offered the city numerous benefits, including the ability to target Hawaii residents and retail buyers, and said the city chose its underwriters by objectively applying the criteria set out in its requests for qualifications.
