LOS ANGELES — Hawaii's Maui County received affirmations on its AA-plus-level ratings for the fifth year running ahead of plans on Oct. 7 to sell $61 million in general obligation bonds competitively.
Maui County hopes to achieve $4 million net present value savings on the combined sale of a $49.2 million refunding and $16.5 million new money, said the county's financial advisor, Curt de Crinis of C.M. de Crinis & Co., Inc.
The new money will be used to reimburse the county's general fund for a variety of public works projects. The refunding targets a 2005 callable bond, a callable federal loan and the advance refunding of a 2008 issue.
The county is anticipating 2% true interest costs on the bond sale, de Crinis said.
The five islands of Maui County — Maui, Lanai, Molokai, Kahoolawe, and Molokini—have a population of 160,000, though the latter two islands are uninhabited.
Leisure and hospitality businesses are the largest employers followed by trade, transportation and utilities and government, according to a Moody's report. The island also has a 415-acre high tech research park, including a Department of Defense supercomputer site.
The county has maintained ratings of AA-plus from Fitch Ratings and Standard & Poor's and Aa1 from Moody's Investors Service since 2010. The outlook is stable for the county, which has $317 million in outstanding debt, de Crinis said.
Moody's cited a growing property tax base, high exposure to a strengthening tourism base and low employment for the rating. Challenges were long-term pension challenges, which Moody's analysts viewed as significant, but manageable.
"These bond ratings continue to validate our efforts to run an efficient, effective and responsive government," said Budget Director Sandy Baz. "We have implemented certain management practices to strengthen the county's financial outlook."
The county changed its approach to issuing GO bonds in 2010 when it hired a financial advisor for the first time. On its negotiated deal that year, it hired a co-manager. Then in 2012, it sold bonds competitively for the first time and was able to attract a high number of bids from top underwriters, de Crinis said.
The changes resulted in millions in dollars in savings across the bonds issued in 2010, 2012 and 2015, de Crinis said.
Finance Director Danny Agsalog said de Crinis and bond counsel Hawkins Delafield & Wood LLP were instrumental in aiding the county as it contemplated different methods of financing such as selling bonds competitively to attract a broader pool of underwriters.
"The competitive process not only provides transparency, but it gives an increasing number of investors an opportunity to own Maui bonds and this directly benefits the county in terms of lower rates," Agsalog said.