RELATING TO CORPORATE BONDS.

SB3177

THE SENATE

S.B. NO.

3177

THIRTY-THIRD LEGISLATURE, 2026

STATE OF HAWAII

A BILL FOR AN ACT

relating
to corporate bonds
.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

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SECTION
1.
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The legislature finds that the state treasury
holds all state funds, and all funds that are in excess of immediate needs are
invested in securities authorized under section 36-21, Hawaii Revised
Statutes.
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According to a national
investment research company, investment grade corporate bonds have current
average yields of four to six per cent.
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The
legislature further finds that investment grade corporate bonds are considered
to carry a relatively low credit risk.
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Providing more investment securities for the director of finance to
consider and invest in will help increase investment earnings and make more
resources available for state programs and to pay down obligations.

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Accordingly,
the purpose of this Act is to authorize the director of finance to invest
certain state moneys in short-term investment grade corporate bonds.

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SECTION
2
.
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Section 36-21, Hawaii Revised Statutes, is
amended by amending subsection (a) to read as follows:

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"
(a)
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The director of finance may invest any moneys
of the State which in the director's judgment are in excess of the amounts
necessary for meeting the immediate requirements of the State and where in the
director's judgment the action will not impede or hamper the necessary
financial operations of the State in:

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(1)
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Any bonds or
interest-bearing notes or obligations:

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(A)
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Of the State
(including state director of finance's warrant notes issued pursuant to chapter
40);

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(B)
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Of the United
States;

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(C)
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For which the
faith and credit of the United States are pledged for the payment of principal
and interest;

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(2)
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Federal Farm
Credit System notes and bonds;

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(3)
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Federal
Agricultural Mortgage Corporation notes and bonds;

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(4)
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Federal Home Loan
Bank notes and bonds;

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(5)
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Federal Home Loan
Mortgage Corporation bonds;

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(6)
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Federal National
Mortgage Association notes and bonds;

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(7)
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Tennessee Valley Authority notes and bonds;

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(8)
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Securities of a mutual fund whose portfolio is
limited to bonds or securities issued or guaranteed by the United States or an
agency thereof or repurchase agreements fully collateralized by any such bonds
or securities;

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(9)
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Securities of a money market mutual fund that
is rated AAA, or its equivalent, by a nationally recognized rating agency or
whose portfolio consists of securities that are rated as first tier securities
by a nationally recognized statistical rating organization as provided in 17
Code of Federal Regulations section 270.2a-7;

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(10)
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Federally insured savings accounts;

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(11)
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Time certificates of deposit;

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(12)
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Certificates of deposit open account;

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(13)
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Repurchase agreements with federally insured
banks, savings and loan associations, and financial services loan companies;

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(14)
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Commercial paper with an A1/P1 or equivalent
rating by any national securities rating service; [
and
]

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(15)
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Bankers' acceptances with an A1/P1 or
equivalent rating by any national securities rating service;
and

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(16)
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Short-term investment grade corporate
bonds;

provided that for authorized investments with stated
maturity dates, the investment, as well as the underlying securities of those
investments, are due to mature not more than five years from the date of
investment.
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Income derived from those
investments shall be a realization of the general fund; provided that income
earned from moneys invested by the general funds, special funds, bond funds,
and trust and agency funds on an investment pool basis shall be paid into and
credited to the respective funds based on the contribution of moneys into the
investment pool by each fund.
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As used in
this section, "investment pool" means the aggregate of state treasury
moneys that are maintained in the custody of the director of finance for
investment and reinvestment without regard to fund designation."

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SECTION 3.
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Statutory material to be repealed is
bracketed and stricken.
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New statutory
material is underscored.

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SECTION 4.
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This Act shall take effect upon its approval.

INTRODUCED BY:

_____________________________

Report Title:

Short-term
Investment Grade Corporate Bonds; Director of Finance; State Moneys

Description:

Authorizes
the Director of Finance to invest certain state moneys in short-term investment
grade corporate bonds.

The summary description
of legislation appearing on this page is for informational purposes only and is
not legislation or evidence of legislative intent.