The Long Island Power Authority (LIPA) plans to issue $985.30 million of tax-exempt bonds backed by restructuring charges imposed on its retail electricity customers.
Citi Group Markets, Bank of America Merrill Lynch, Barclays and RBC Capital Markets are the underwriters.
Fitch Ratings expects to assign ‘AAA’ ratings to all 20 tranches of Series 2015 bonds to be issued via the Utility Debt Securitization Authority. These bonds have final maturities ranging from June 2023 to December 2037. Bonds maturing before June 2016 are non-callable, but those maturing after June 2026 are subject to redemption on or after December 2025.
LIPA first issued utility tariff bonds in 2013, after the transaction was authorized by the New York State Assembly and Senate. This year, the Assembly and Senate authorized additional issuance of up to $2.48 billion.
The restructuring charge is mandatory and is adjusted annually through a “true up” mechanism to ensure that collections are sufficient to pay interest and principal on the bonds, as well as fund the debt service and operating reserve accounts, regardless of the amount of electricity that customers use.
Proceeds from the securitization will be used to repay certain of LIPA’s outstanding indebtedness.