Hawaii's GO Bonds Assigned 'AA' Rating

Standard & Poor's Ratings Services assigned its 'AA' long-term rating to Hawaii's $312 million series 2010DX general obligation (GO) bonds (Build America Bonds -- direct payment) and its 'AA' rating to the state's $222.325 million series 2010DY GO refunding bonds. At the same time, Standard & Poor's affirmed its 'AA' rating and underlying rating (SPUR) on the state's outstanding GO bonds and its 'AA-' rating on the state's outstanding certificates of participation (COPs). The outlook is stable.


"The rating reflects the state's well-established, proactive budget monitoring practices, including frequent revenue forecast updates," said Standard & Poor's credit analyst Paul Dyson. "Declines in tourism-related metrics and revenues, construction spending, and other related economic activity have led to lower general fund tax revenue growth rates, but management has been willing to implement aggressive solutions to mitigate the effects."

The series DX bonds are being issued to fund various public improvements, while the series DY bonds are being issued to refund various outstanding GO bonds.

After sustained economic expansion between 2003 and 2007, when many sectors performed at record levels, Hawaii's (population 1.3 million) economic trends decelerated and, in many cases, turned negative in 2008 and 2009. Job counts fell 1% in 2008 and a 3.4% decline was realized in 2009. State officials project an additional decline in 2010 but indications are that it will be a less than 1% decline, followed by growth in 2011. However unemployment, at 6.9% in December 2009, was still well below the national rate of 10%. This 6.9% rate now ranks Hawaii as the 15th lowest nationally. Since 2003, Hawaii's unemployment rate has generally been 2%-3% below the national rate. Personal income growth in Hawaii ranked it fourth nationally during the first nine months of 2009. The state's median household income is what we consider strong at 121% of the national average.
RELATED RESEARCH
USPF Criteria: GO Debt, Oct. 12, 2006

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