The City and County of Honolulu, Hawaii, sold almost $190 million in bonds to finance improvements to its wastewater system.
The bonds mature between 2028 and 2053, yielding between 3.11% and 4.59%. They received a rating of AA+ from S&P Global Ratings and AA from Fitch Ratings.
The rating reflects “the system’s very strong financial profile in the context of very strong revenue defensibility and a very low operating risk profile,” according to Fitch.
The issuance comes as Honolulu’s wastewater system contends with rising sea levels made worse by human-caused climate change. The city projects that sea level rise will increase groundwater levels, resulting in higher infiltration rates to the wastewater system.
“The Department is assessing infrastructure throughout its nine wastewater basins to identify additional capital improvements to address potential risks from climate change,” according to the official statement accompanying the sale of the bonds.
Proceeds from the sale of the bonds will fund additions and improvements to the Honolulu wastewater system. The city has designated the securities as “green bonds.”
Such improvements figure prominently in the city’s capital improvement program, which lays out planned expenses through 2027. The city expects to appropriate $2.9 billion for the program, the majority of which will be funded by bonds.
Honolulu’s wastewater system provides services to about 780,000 people across 600 square miles. The system collected $466 million in revenue last year. The bonds are limited special obligations of the City and County of Honolulu, payable by pledged revenue from the wastewater system.
BofA Securities, Inc., Raymond James & Associates, Inc., and Stifel, Nicolaus & Company, Inc. served as underwriters on the issuance, purchasing the bonds for $200 million. The price reflected a premium of $11 million.