Tourism uptick Hawaii's recovery from a slump in tourism after the Sept. 11 terrorist attacks means the credit rating on its $3.4 billion of bonds won't be lowered.
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By Dennis Walters
Bloomberg NewsMoody's Investors Service in October assigned a "negative" outlook to Hawaii's Aa3 credit rating, in the wake of the terrorist attacks. Today, Moody's changed its outlook to "stable." Lower credit ratings can force up borrowing costs in the municipal bond market, as investors demand higher yields to compensate them for risk.
The state's dependence on air travel for visitors meant that the negative effect of the attacks on Hawaii "dwarfed those of all other states," Moody's said in a statement.
Tourism accounts for about one-quarter of Hawaii's annual economic activity. The state's tax collections in the fiscal year ended June 30 fell 3.5 percent below the previous year, Moody's said. The state cut spending and tapped cash reserves to cover the shortfall.
Tourist visits, which had dropped almost 30 percent late last year, have rebounded, Moody's said, with preliminary figures showing June's traffic down 1.4 percent from the same month a year ago. Hawaii's unemployment rate, at 4.5 percent before the attacks, peaked at 5.7 percent in November and returned to 4.5 percent last month.
