The Hawaii Department of Transportation said S&P Global Ratings had notified the HDOT Harbors Division that
the credit ratings firm raised its long-term rating and underlying rating to 'AA-' from 'A+' on Hawaii's harbor system revenue bonds, citing the division's financial management.
Gov. David Ige said the improved debt rating "means that the state is able to get more buying power from our dollars through lower interest rates, and I commend Transportation Director Ford Fuchigami, our Harbors Deputy Director Darrell Young and their staff for having the determination to see this through."
According to an HDOT press release, S&P credit analyst Paul Dyson said: "The rating action reflects our view of the harbor division's historical willingness to make ample tariff increases to support rising operating costs, debt service and capital needs, and the division's maintenance of very strong coverage and exceptional liquidity in recent years."
HDOT said the upgraded 'AA-' credit rating is the result of strategic financial decisions that include raising of wharfage fees and refinancing more than $91 million to lower debt costs by almost $2 million a year on outstanding revenue bond debt for series 2004, 2006 and a portion of series 2007 bonds.
S&P also gave the Harbors Division debt a "stable" outlook, which the department said indicates secure future economic and financial trends for harbor system revenue. "The stable outlook reflects anticipation that upcoming port expansions and maintenance requirements will be prioritized and undertaken as funds become available, and through adoption of policy management will maintain a cash balance reflecting 1,000 days of operating expenses," the announcement said.
HDOT Director Fuchigami said: "Achievements like these are a result of solid planning, hard work and decisive leadership . . . S&P's announcement will give our staff the additional tools to continue important projects like the Kapalama Container Terminal, which is vital to Hawaii's economy and our way of life."
The department said that terminal is the centerpiece of a harbor modernization plan and "is necessary to maintain the vital, just-in-time shipping logistics necessary to sustain our island state. More than 80 percent of all goods consumed by Hawaii residents and its visitors are imported to the islands, and of that, more than 98.6 percent flows through the Port Hawaii commercial harbor system."
In addition to the upgraded Harbors Division bond rating, HDOT said its Airports Division experienced significant upgrades in 2016. And the Highways Division recently sold $204 million in highway revenue bonds at the lowest interest rate in the history of Hawaii's highway bond program at under 2.24 percent.