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 be taxable.
“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.