NYPA Approves Issuance of
$465 Million in Refunding Transactions to Reduce Interest on Debt
September 20, 2005
FOR IMMEDIATE RELEASE
ALBANY—New York Power Authority (NYPA) trustees
today approved new resolutions authorizing the issuance and sale of two
new series of bonds, the Series 2005A and Series 2005B Revenue Bonds
(the 2005A Bonds and 2005B Bonds, respectively), and Commercial Paper
Notes (CP-3) for an aggregate amount not to exceed $465 million. The
financings will reduce debt costs to NYPA.
The 2005A Bonds, in an amount not to exceed $195
million, are being issued for the purpose of refunding a portion of the
Series 2000A Revenue Bonds (2000A Bonds), which are callable on December
15, 2005, and to pay the cost of issuance of the 2005A Bonds.
Approximately $187 million of the 2000A Bonds will
be refunded. These bonds financed a portion of the costs of NYPA’s Long
Island Sound Cable Project, an underground and underwater transmission
line. The majority of the projected savings from this refunding will be
passed on to the Long Island Power Authority through reduced debt
service billings. The Series 2005A Bonds are expected to be tax-exempt,
fixed rate bonds.
The 2005B Bonds and CP-3, in an amount not to
exceed $270 million, are being issued for the purpose of refunding
approximately $238 million of Commercial Paper Notes (CP-2), to pay
associated swap termination fees and the cost of issuance of the 2005B
Bonds. The CP-2 to be refunded were swapped to a fixed rate in order to
hedge against rising interest rates, therefore to terminate those swaps
a payment will be required to the swap counterparties. The Series 2005B
Bonds are expected to be tax-exempt, fixed rate bonds and the CP-3 will
“Reducing debt service helps save Power Authority
customers money and continues NYPA’s sound stewardship of its debt
service coverage that has been consistently recognized by the rating
agencies,” said Joseph Seymour, chairman, NYPA. Current ratings
assigned to NYPA are AA-minus by Standard & Poor’s, Aa2 by Moody’s
Investors Service and AA by Fitch Ratings, all with a stable outlook.
The life of the 2005A and 2005B Bonds will not
extend beyond the current maturity dates of the instruments they are
refunding. The 2005A Bonds would amortize over the same period as the
2000A Bonds with the same maturity date of November 15, 2020. The 2005B
Bonds would be amortized over the same period as the CP-2 with the
maturity date of February 15, 2015. The CP-3 would be amortized over
the next three to five years.
A team of four underwriters led by Morgan Stanley
will market the 2005A Bonds. Citigroup will oversee the 2005B Bonds
with assistance from three additional underwriters. No dates have been
set for the sale and closing of the bonds and notes.
NYPA uses no tax money or credit in its
operations. The Power Authority finances operations through the sale of
bonds and earns revenue from proceeds of its operations, which is in
large part, the sale of electricity. NYPA is the largest state-owned
electric utility in the nation. Statewide, NYPA generates electricity
at 17 locations and operates over 1,400 circuit miles of transmission.