by Andrew Walden

According to the State of Hawaii “2023 Statement of Indebtedness,” Hawaiian Electric has $542M worth of Special Purpose Revenue Bonds (SPRB) outstanding and another $700M authorized by the Legislature but not issued. 

SPRBs are tax-free municipal bonds, but are funded entirely by revenues from the issuer, in this case HECO.  The tax-free status, conveyed by act of the legislature, reduces HECO’s borrowing costs, but State is not a ‘co-signer’ on the loans.

With Hawaiian Electric suddenly at risk of bankruptcy due to claims related to the Lahaina Fire, Hawai’i Free Press asked the Hawaii Department of Budget and Finance what risks are entailed by HECOs SPRBs.  Here is their answer: 

The Department of Budget and Finance of the State of Hawaii only serves as a conduit for the issuance of the special purpose revenue bonds. The bond documents do not create an obligation of the State of Hawaii to the SPRB bondholders in the event of a default.  

The Department of Budget and Finance does not have any examples of SPRB borrower default in its records.  Payments on the bonds are dependent on how the debt is structured.  Information on that can be found on EMMA.  

DBF also says “currently, no applications have been submitted (by HECO) to utilize any of those outstanding ($700M) SPRB authorizations.”

---30---