Maui Business

HDOT Saves Millions Refinancing Revenue Bonds

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In a move that will generate $27 million of savings for the Airports Division over the next 16 years, the Hawai‘i Department of Transportation (HDOT) has successfully refinanced $245 million of outstanding revenue bonds.

The bonds that were refinanced were originally issued in 2010 with an average interest rate of 5.11% and a final maturity in 2034.  The new bonds have an average interest rate of 3.94% with the same final maturity in 2034.

“The state’s strong performance allows us to generate significant savings which can then be reinvested in the State of Hawai‘i. I’m very happy that the market continues to have strong confidence in our airport system and expansion plans,” said Gov. David Ige.

The Airports Division also sold $415 million of new revenue bonds to fund upcoming capital projects necessary to maintain, preserve, and expand air service facilities across the state.  The bonds have an average interest rate of 4.11% with a final maturity in 2048.  The interest rate on the bonds sold today represents the lowest interest rate ever achieved by the Airports Division.


Prior to the bond sale, the Airports Division’s credit quality was reviewed by S&P Global Ratings, Moody’s Investors Service, and Fitch Ratings, receiving a ratings upgrade by S&P to AA- from A+.  Moody’s and Fitch affirmed the Division’s strong ratings of A1 and A+, respectively.  The strong market conditions and improved credit rating were instrumental in obtaining the lowest interest rate ever achieved by the Airports Division.

In preparation for the bond sale, the Airports Division’s management team led an extensive marketing campaign, highlighted by an online investor roadshow that was viewed by over 50 investors and in-person meetings or calls with investors representing 16 different accounts.   As a result, the bonds received an overwhelming response from investors, with over $2.1 billion of orders from Hawai‘i and national investors.

The three rating agencies recognized the strength of management as a key credit feature, emphasizing management’s dedication to modernizing facilities, increasing system capacity, enhancing revenue, and improving passengers’ overall experience.  S&P added that “Management has historically operated in a fiscally prudent manner, budgeting conservatively, maintaining strong cash reserves, and modernizing and enhancing terminal facilities. The CIP, supported by the airlines, is demand-driven and modular, and the [Division] has several measures in place to mitigate construction risk.”


Morgan Stanley served as the lead managing underwriter for the bond sale, with BofA Merrill Lynch as the co-senior manager, and Goldman Sachs and Wells Fargo as co-managers.  A Hawai‘i-based selling group was utilized to market the bonds to local retail investors.


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