Announcement of Periodic Review: Moody's announces completion of a periodic review of ratings of Hawaii (State of)

From Moody’s Global Credit Research - 29 Mar 2021

New York, March 29, 2021 -- Moody's Investors Service ("Moody's") has completed a periodic review of the ratings of Hawaii (State of) and other ratings that are associated with the same analytical unit. The review was conducted through a portfolio review discussion held on 24 March 2021 in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. The review did not involve a rating committee. Since 1 January 2019, Moody's practice has been to issue a press release following each periodic review to announce its completion. 

This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future. Credit ratings and outlook/review status cannot be changed in a portfolio review and hence are not impacted by this announcement. For any credit ratings referenced in this publication, please see the ratings tab on the issuer/entity page on www.moodys.com for the most updated credit rating action information and rating history.

Key rating considerations are summarized below.

The Aa2 rating on the State of Hawaii's general obligation bonds recognizes the significant fiscal challenges posed by the current health and economic crisis, but also the state's strong fiscal governance, its positive financial position and liquidity entering the crisis, and our expectation that the state will take timely action to respond to the challenges. Additional long-term credit factors include the volatility of the state's tourism industry; above average debt, pension, and OPEB liabilities; and high fixed costs. The state is experiencing a severe decline in tax revenues as a result of the rapid downturn in visitor arrivals, resulting in a multi-year fiscal imbalance and the need for significant spending adjustments. The state's financial plan includes deficit financing, suspending indefinitely payments to pre-fund its OPEB liability, drawing down reserves, and spending cuts. 

This periodic review also covered related credits within the state's debt stack including any special tax, lease, appropriation and moral obligation, intercept program, and pool program ratings.

This document summarizes Moody's view as of the publication date and will not be updated until the next periodic review announcement, which will incorporate material changes in credit circumstances (if any) during the intervening period.

The principal methodologies used for this review were Lease, Appropriation, Moral Obligation and Comparable Debt of US State and Local Governments published in January 2021, US Public Finance Special Tax Methodology published in January 2021 and US States and Territories published in April 2018. Please see the Rating Methodologies page on www.moodys.com for a copy of these methodologies.

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