Competitive Bond Sale Generates Millions for Projects
Maui County recently sold $106.3 million in general obligation bonds at a premium generating $113.9 million in total proceeds.The successful issuance was possible due to Maui County’s strong bond ratings, coupled with substantial investor interest and a continued low-interest-rate environment, according to an announcement by County Dept. of Finance Director Mark Walker.
The competitive offering attracted strong bids from nine underwriters including most of the major Wall Street firms. The winning bidder was Bank of America Merrill Lynch, who bid a 3.13% true interest cost (TIC) for the 20-year bonds. According to Walker, of the $113 million in bond proceeds, $12.1 million will be used to prepay and refund existing higher interest rate loans and bonds, while $100.9 million will be allocated to fund new and ongoing capital improvement projects.
“The prepayment and refunding of the higher interest rate loans and bonds will certainly save Maui County taxpayers money,” Walker said. “More importantly, it will allow the county to continue moving forward with its many capital improvement projects including the new county service center in Kahului.”
This is the fourth time since 2010 that the County of Maui has offered its bonds for sale using the competitive bid method. Historically, most bond offerings in the State of Hawai‘i have been through the negotiated sale method, essentially hiring a firm to underwrite the bonds and find investors.
“Given our current strong financial condition, strong investor interest and the current market, we feel that the competitive bid method is the best for the county,” Mayor Alan Arakawa said. “It is certainly the most transparent.”
The County of Maui was recently rated by Moody’s as Aa1 and by Fitch Rating and Standard & Poors as AA+ for this bond sale, which presently gives Maui County the highest bond rating in the state.