Bangkok--4 Jun--Standard & Poor's
Standard & Poor's Ratings Services assigned its 'AA' long-term rating to Hawaii's $400 million series 2009 DQ and $220 million series 2009 DR general obligation (GO) bonds, and affirmed its 'AA' rating and underlying rating (SPUR) on the state's outstanding GO bonds.
"The rating reflects the state's well-established, proactive budget monitoring practices, including frequent revenue forecast updates," said Standard & Poor's credit analyst Paul Dyson. "Declines in tourism-related metrics and revenues, construction spending, and other related economic activity have led to lower general fund tax revenue growth rates, but management has been willing to implement aggressive solutions to mitigate the effects."
The series 2009 DQ bonds will be issued to fund projects in the state capital plan. The series 2009 DR bonds will refund existing debt.
After sustained economic expansion between 2003 and 2007, when many sectors performed at record levels, Hawaii's (population 1.3 million) economic trends are decelerating and, in many cases, turning negative. State officials project real personal income, total wage and salary jobs, and state real GDP will all show negative growth in calendar 2009. Unemployment, at 2.6% in 2007, was the lowest in the nation, but grew to the eighth lowest in 2008, at 3.9%. Year-to-date unemployment -- at 6.5% as of March 2009 -- now ranks Hawaii as the 12th lowest nationally, with the national unemployment rate at 8.5% as of March 2009. Robust construction activity had spurred job growth during the past several years, but activity has recently slowed and the value of private building authorizations is down 27% in the first quarter of 2009 versus 2008's first quarter. However, nominal personal income is more stable, and actually increased 2.5% in the fourth quarter of 2008 versus Q4 of 2007. The state's median household income was what we consider a strong 121% of the national average as of 2008.
RELATED RESEARCH
USPF Criteria: "GO Debt," Oct. 12, 2006
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Media Contact:
Ana Sandoval, New York (1) 212-438-5095, [email protected]
Analyst Contacts:
Paul Dyson, San Francisco (1) 415-371-5079
Gabriel Petek, CFA, San Francisco (1) 415-371-5042