Bond refinancing will save isles $32.8 million, Ige says

The state refinanced $345 million in general obligation bonds Thursday in a move that will save the state $32.8 million during the next eight years, according to an announcement from Gov. David Ige.

The state issued bonds dating back to 2011 and earlier at higher interest rates to fund construction of public improvement projects that include public buildings, schools and university facilities.

The state then obtained new, lower-interest costs through the refinancing. The rates on the new bonds average 2 percent or lower, according to Director of Finance Wesley Machida.

Ige said in the announcement that the state obtained a lower interest rate because of favorable conditions in the bond market and improved ratings for the state’s financial condition, which increased investor demand for the bonds.

Moody’s Rating Service rated the state bonds as Aa2 with a positive outlook. Standard &Poor’s Rating Service recently improved the state’s AA rating outlook from “stable” to “positive.”

Ige led the state’s financing team, including Machida, in credit rating presentations in February with S&P, Moody’s and Fitch.

“We discussed with the rating agencies our conservative fiscal management policies and my focus on addressing and managing the state’s long-term pension and health fund obligations,” Ige said in a prepared statement. “We also discussed the need to maintain the state’s reserve fund balances to effectively manage our financial resources. Our goal is to manage our budget to live within our means and to best position the state to withstand future economic fluctuations.”

Bank of America Merrill Lynch served as lead underwriter for this offering with Goldman Sachs serving as co-senior manager for the negotiated refunding bond sale.