The State of Hawai'i sold $400 million of general obligation bonds to fund various capital projects of the state, including public school facilities, University of Hawai'i projects and other statewide capital projects.

The $400 million sale included $25 million of taxable bonds to fund the acquisition of the Kukui Gardens housing project that resulted in the preservation of 857 affordable rental units that were at risk of being converted to market rate rental units. The remaining $375 million of bonds were sold on a tax-exempt basis, which resulted in an overall interest rate of 4.35 percent.

An additional $29 million of bonds were sold to refund outstanding bond issues and lower borrowing costs. The refunding resulted in a savings of almost $2 million as a result of securing lower interest rates.

The state said the sale was well received by a variety of investors, particularly retail accounts. The sale received a record $108 million of retail orders, many of which were from Hawai'i residents. The sale also included strong participation from banks, insurance companies, bond funds and other traditional institutional investors.

Moody's Investors Service, Standard & Poor's Ratings Service and Fitch Ratings affirmed the State's bond ratings of Aa2, AA and AA, respectively.

Fitch Ratings stated in its report, "The state of Hawai'i's 'AA' rating is based on sound financial operations, maintained even under stressful periods, and conservative budgetary procedures."

"In the past three years, Moody's, Standard & Poor's and Fitch have upgraded the state's bond rating to its highest level in state history," Gov. Linda Lingle said. "I believe that the ratings reflect our prudent fiscal management of state resources and the state's sustained economic performance."

For the first time in over a decade, the state sold its bonds solely on its own credit and did not use bond insurance.

"Our high bond ratings were even more crucial with this sale and resulted in lower borrowing costs to the state," Lingle said.

The bonds were sold by a financing team with Citigroup Global Markets Inc. serving as senior manager and UBS Securities LLC serving as co-manager.