DOT News Release: HDOT AIRPORTS DIVISION TAKES ADVANTAGE OF LOW RATES TO FINANCE $230 MILLION FOR CRITICAL PROJECTS, REFINANCES DEBT TO SAVE
Posted on January 21, 2022 in Latest news from the department, Press room
HONOLULU – The Hawaii Department of Transportation (HDOT) is pleased to announce that the Airports Division has successfully sold new Airport System Revenue Bonds to provide critical funding for projects that will continue to modernize and expand air service facilities throughout the state. At the same time, the Airports Division took advantage of low interest rates in the municipal bond market to refinance past bonds to reduce costs.
The new bonds will fund approximately $230 million in critical projects that will support the momentum of the Airports Division’s capital improvement program as HDOT continues to invest in the state’s airports. The bonds have an average interest rate of 3.44% with a final maturity in 2051. The interest rate of the bonds sold today represents one of the lowest interest rates ever achieved by the Airports Division , narrowly exceeding the all-time low of 3.35% that was reached in October 2020.
HDOT also successfully refinanced $57 million of outstanding revenue bonds for savings. The bonds that have been refinanced were originally issued in 2011 with an average interest rate of 4.80% and a final maturity in 2024. The refinancing will lower the average cost to approximately 1.00%, thereby reducing service costs of the debt of these bonds.
In preparation for the bond sale, the Airports Division management team conducted an extensive marketing campaign, highlighted by a live virtual presentation by senior State, HDOT and Airports Division officials. airports. In attendance were investors representing some of the largest accounts in the United States that buy municipal bonds. The Division also released an online presentation for local and national investors and further targeted Hawaiian investors with digital advertising on local websites.
“Air service is critical to Hawaii,” Governor David Ige said. “The Hawaii Department of Transportation and the Airports Division continue to move cautiously to complete plans to modernize and expand our facilities while taking advantage of cost reduction opportunities. These actions are critical as we continue to adapt to the COVID-19 pandemic, and the success of today’s transaction demonstrates the market’s continued confidence in Hawaii and our airport system as we build for the future. to come up.
Prior to the sale of the bonds, the credit quality of the Airports division was reviewed by Moody’s Investors Service, S&P Global Ratings and Fitch Ratings, which each confirmed the division’s strong bond ratings of A1, A+ and A+, respectively. S&P raised the Division’s outlook from “Positive” to “Stable,” citing the recovery of U.S. domestic travelers to pre-pandemic levels, proactive steps taken by Division management, and financial planning and resilience to long-term government as significantly positive credit factors. Moody’s and Fitch both assigned a “stable” outlook to the bonds, with Moody’s acknowledging the airports division’s “strong financial flexibility to manage COVID-related pressures as passenger levels trend toward full recovery.”
“Strong credit ratings and a robust marketing effort were instrumental in securing one of the lowest interest rates ever for the airports division, despite selling the bonds in a tough market,” said Ross Higashi, Deputy Director of the Airports Division. Municipal bond market volatility has increased in recent weeks as investor sentiment continues to shift in response to the global COVID-19 pandemic and federal economic announcements.
Morgan Stanley was the lead underwriter responsible for the bond sale, with BofA Securities serving as co-lead manager. A Hawaii-based sales group was used to market the bonds to local retail investors.