Hawai‘i’s Corporate Debt

Dec 22, 2017

Downtown Honolulu from Aloha Tower
Credit Ken Lund / Flickr

Interest rates are going up, and that means loans are getting more expensive. Nationwide, publicly traded companies have increased their debt by about $2 trillion since late 2015. Such debt has increased in Hawai‘i as well, but often just as another cost of doing business. We get a little context from Pacific Business News editor-in-chief A. Kam Napier.

Borrowing by America’s largest publicly traded companies increased 16 percent over the past two years, by a combined total of about $2 trillion. Top debt-holders include telecommunication companies such as AT&T, Verizon Communication and Comcast Corp., automotive companies such as Ford and General Motors, and tech companies Apple and Microsoft.

Generally, the debt has been fueled by low interest rates, making it cheaper to borrow. Another factor: recovery from the last recession, making borrowers feel confident they can make payments on their debt. AT&T’s borrowing is the highest at $150 billion.

Here in Hawaii, the scale is considerably smaller.

Hawaiian Electric has the greatest debt at $1.6 billion, followed by Matson at $810 million, Alexander & Baldwin at $584 million, and Hawaiian Holdings Inc., parent company of Hawaiian Airlines, at $447 million.

As we spoke to these companies, a theme emerged: investment. Hawaiian Airlines has had the start-up costs of new facilities, planes and additional staff as it expands operations. Matson is building four new ships for its Hawaii service. It makes a difference, too, whether the debt is short-term or long-term. Alexander & Baldwin had a 3 percent increase in debt from 2014 to 2106, but has paid off or refinanced short-term debt in favor of easier-to-manage long term debt.