Gov. Neil Abercrombie announced today that the state has completed a record $1.3 billion bond sale and has held on to its credit ratings despite the financial challenges of the past few years.
The state sold $800 million in new debt and refinanced $488 million in existing bonds at a lower interest rate, which will save the state $59 million through 2018.
Kalbert Young, the state’s budget director, said investors purchased the bonds at a premium, generating about $100 million in cash that may be used to replenish the state’s hurricane relief fund and rainy day fund. Abercrombie had tapped the emergency reserves to help close a $214 million deficit and get through the last fiscal year.
The total transaction had an interest cost of 3.34 percent
Abercrombie was gratified that credit rating agencies recognized the state’s fiscal management in closing a projected two-year budget deficit of $1.2 billion. The governor said the recognition by credit rating agencies is an objective assessment of his administration’s fiscal stewardship during his first year in office.
"About a year ago, just a year ago this week, we inherited a fiscal nightmare," Abercrombie said at a news conference at the Chamber of Commerce of Hawaii in downtown Honolulu.
Ginny Pressler, the chair of the chamber’s board of directors, described the bond sale as a major boost of confidence for the state and a "gift to the business community."