Bangkok--15 Jun--Standard & Poor's
Standard & Poor's Ratings Services raised its underlying rating (SPUR) to 'AA-' from 'A+' on Kauai County, Hawaii's outstanding general obligation (GO) bonds. The outlook is stable.
"The raised rating reflects our view of the county's consistent and very strong reserve position maintained over several years, as well as its continued low debt burden," said Standard & Poor's credit analyst Paul Dyson. "Owing to the county's generally conservative financial management practices, we believe its credit quality and rating are relatively resilient to the recent trend of softer revenue performance related to the current downturn in the real estate market and tourism sector."
Kauai's financial performance has been in our opinion strong in recent years. General fund surpluses realized during fiscals 2004-2008 brought the county's unreserved fund balance to $35.2 million, or what we consider a very strong 42% of expenditures. For fiscal 2009, the county projected an additional $4.9 million surplus, bringing the unreserved fund balance to $40.5 million, or 44% of expenditures. However, given officials' projections of softer revenues and rising expenditures for fiscal 2010, the county's budget indicates an $8 million general fund deficit for fiscal 2010, reducing the unreserved fund balance to approximately $32.5 million, but what we consider a still very strong 33% of expenditures. The county's budget for fiscal 2010 includes several cost-saving measures, including reduced travel, a hiring freeze, a salary freeze for non-public safety employees, reduced equipment spending, and a reduction in take-home vehicles. In total, departments reduced operating expenditures by 14%.
Overall net debt is in our view low at $1,013 per capita, or 0.3% of market value.
Kauai County comprises the two northernmost islands in the Hawaiian archipelago, Kauai and Niihau. Approximately 99% of the county's estimated 64,061 residents live on Kauai.
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