Fitch Global Ratings, Moody’s Investor Service and S&P Global Ratings assigned ratings of AA+ (stable outlook), Aa1 (stable outlook), and AA+ (stable outlook), respectively, to Maui County’s General Obligation Bonds, Series 2021, Mayor Michael Victorino announced today. Of note is Fitch’s outlook change from “negative” in 2020 to “stable” for 2021. This reflects the County’s “successful efforts to maintain its financial flexibility” and the improving economic conditions of the County through the COVID-19 pandemic.
The approximately $80 million series 2021 bonds are due to be sold via negotiation on August 4, 2021. The money will be used for Maui County capital improvement projects.
Aa1/AA+ is the second highest rating a debt issuer can receive. The excellent credit ratings mean Maui County taxpayers could save millions of dollars on interest costs when borrowing money at a low interest rate in the bond market.
The rating agency actions also affirm the Aa1/AA+/AA+ ratings for Maui County’s $277 million outstanding general obligation bonds.
“Fitch’s upgrade of Maui County’s 2021 financial outlook to ‘stable’ shows the strength of our post-pandemic recovery, and it recognizes the work of our dedicated employees in the Department of Finance, Budget Office and Department of Management,” Mayor Victorino said. “It’s a credit to the leadership of Finance Director Scott Teruya, Deputy Director May-Anne Alibin, Budget Director Michele Yoshimura, Managing Director Sandy Baz and Deputy Managing Director Josiah Nishita. The people of Maui County will benefit from low interest rates and the savings of millions of dollars.”
On July 16, 2021, Fitch revised Maui County’s rating outlook to stable from negative reflecting, “the county’s successful efforts to maintain its financial flexibility through the coronavirus pandemic-related economic downturn and into the current recovery, allowing it sufficient capacity to weather future economic cycles.” Fitch also noted: “The county is well positioned to address economic challenges as a result of its high ability to raise revenues and substantial reserves. Budget management during the pre-pandemic economic expansion was solid, with the county setting aside reserves to address long-term liabilities and emergencies.”
Moody’s cites the Aa1 rating “reflects the continued economic recovery of Maui driven by the rebound of tourism-related activity” and also states: “Conservative budget estimates and solid financial planning support a stable financial profile.” They go on to state “Maui’s large tax base and strong resident wealth and incomes and the county’s reliance on generally stable and predictable property taxes.”
In its credit overview, S&P mentions, “The County performed well during the past year with a property tax revenue foundation that experienced only a very modest decrease.” Additionally, S&P notes: “The county’s very strong available reserves provide it with significant budgetary flexibility as the local economy continues to recover.”
All three rating agencies highlighted Maui County’s rebound of tourism-related activity, strong financial management including building up strong reserve levels and proactively addressing long-term liabilities.