Occurrences not seen as a credit risk
In recent weeks S&P Global Ratings and Fitch Ratings expressed opinions on the ability of Hawaii government entities to cope with flooding, mudslides, an earthquake and a volcanic eruption, all of which have occurred since mid-April.
S&P stated that, at this point, they don’t expect the eruption of the Kilauea Volcano to significantly impact their AA-/Stable credit rating of Hawaii County. The rating agency will continue to evaluate the situation, along with the duration and on-going impact of the eruption, which had damaged local roads, highways, power lines, and a number of residential structures as of this writing.
A Fitch Ratings analyst, Stephen Walsh, was quoted in Bond Buyer as saying “It doesn’t take away from the tragedy from an individual standpoint, but looking at the bottom line, we don’t expect it to have a financial impact on either Hawaii County or the state”.
Based on the Hawaii County fiscal 2017 audit, S&P expressed the opinion that the county maintains strong liquidity levels, along with a balance of over $5.7 million in its general fund for disaster and emergencies, and a general fund balance of approximately $25 million, which they consider strong. In addition, there are expectations that the county will receive funding from the Federal Emergency Management Agency (FEMA) to assist with recovery efforts.
The state of Hawaii had previously received approval for millions of dollars in funding from FEMA following flash floods and mudslides on Kauai and Oahu, which occurred in mid-April. That funding will assist Kauai County in making repairs to infrastructure and public facilities. S&P highlighted the Kauai County general fund balance of nearly $50 million, which the agency considers to be very strong, along with liquidity of $71 million, also viewed as very strong.