County refinances GO bonds following high bond ratings

LIHU‘E — The County of Kaua‘i has refinanced $24.9 million in general obligation bonds, a move that will save the county millions of dollars over the next 15 years, a county news release states.

As a  result of re-financing the Series 2001A General Obligation Bonds (issued May 15, 2001) on June 21, 2011, annual debt service savings for the County of Kaua‘i will average $300,000 per year for the next 15 years, while the Department of Water’s annual debt service savings will average $73,000 a year.

The county’s bond sale was bolstered by reports last week from Standard and Poors, Fitch and Moody’s that its rating would remain unchanged. Both Standard and Poors and Fitch reconfirmed the County’s “AA” status, while the Moody’s rating remained unchanged at Aa2.

The definition of these ratings is that the issuer has very strong credit quality, the release states.

“We are very pleased to retain this high bond rating in light of declining revenues and the difficult economic climate,” said Finance Director Wally Rezentes Jr.

Rezentes noted that there were $51 million in orders for the county’s bonds, indicating a high level of confidence on the part of investors.

In early June, Rezentes, along with Mayor Bernard Carvalho Jr., Council Chair Jay Furfaro, Economic Development Director George Costa, and Treasurer David Spanski, traveled to San Francisco to make presentations to the three bond rating agencies.

The presentations focused on the county’s sound fiscal management practices including:

• Establishment of a reserve policy

• Implementation of a residential refuse collection assessment

• Implementation of phase two of sewer fee increases

• Reduction of the county’s health fund contribution from 60 to 50 percent

• Dollar-funded vacant positions

In its report, Fitch ratings said, “The AA rating reflects the county’s strong financial position, with stable operating margins and healthy general fund balances, despite exposure to economically sensitive revenues.”

Carvalho thanked his team and the council chair for working together to deliver a strong case for the sustained high ratings.

“We had a great story to tell of fiscal responsibility even during these difficult times,” said the mayor. “The agencies were very impressed and that reflects well on the performance of our Kaua‘i County team.”


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