ALAMEDA, Calif. — Maui County, Hawaii, is trying some new things this week in the pricing of $74 million of general obligation bonds.
Instead of handing the deal off to a sole underwriter, the county is using two, with Piper Jaffray & Co. as senior manager and RBC Capital Markets as co-manager. Maui has also hired C.M. de Crinis & Co. as financial adviser, the first time it has used one since 1998, according to county Treasurer Suzanne Doodan.
“We had 15 underwriting proposals, and they were all very close together, as you might imagine,” she said in a phone interview. “So we decided to go with a co-manager setup.”
For years, the Hawaii market has been dominated by the same two or three underwriters, she said.
“The more people we can bring in to the market, I think the better off we all are,” Doodan said.
Citi and Bank of America Merrill Lynch dominated the Hawaii underwriting market in 2008 and 2009, according to Thomson Reuters. UBS Securities was a major player in Hawaii before it withdrew from municipal underwriting in 2008.
It is also atypical for an Aloha State issuer to use a financial adviser.
“That definitely was new territory for us,” Doodan said. “He’s definitely provided value added.”
The deal includes $23.4 million of taxable debt being issued to take advantage of the recovery zone economic development bond program with its 45% direct subsidy for interest, and $50.7 million of tax-exempt debt, with approximately a 50-50 mix of refunding and new money.
Final pricing is scheduled for Wednesday, after a retail order period Tuesday, Doodan said.
The looming expiration of the RZEDB “SuperBAB” program is a major factor in the deal’s timing, she said.
Maui typically advances money from its general fund to pay for capital projects, then reimburses them with bond proceeds.
“We could probably go to February based on what we have in the pipeline, but not with the deadline looming,” she said. “We tried to get ahead of the rush.”
Standard & Poor’s upgraded Maui one notch to AA-plus Thursday, citing sustained strong and stable financial performance, and improved financial management practices. That brings Standard & Poor’s into alignment with Fitch Ratings and Moody’s Investors Service, which have affirmed their AA-plus and Aa1 ratings, respectively.
“The county is very strong financially and deserves this upgrade for its conservative management and strong fund balances,” finance director Kalbert Young said in a statement.
Hawkins Delafield & Wood LLP is bond counsel.
