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Long Island Power Authority Sells $579 Mln in Bonds

By Munichain News Desk

The Long Island Power Authority (LIPA) issued $579.3 million in bonds to fund system improvements.

The authority sold the bonds in two series. The Series 2023E bonds, consisting of $400 million, mature between 2024 and 2053, yielding between 2.78% and 4.07%. The Series 2023F bonds, consisting of $179.3 million, mature between 2027 and 2033, yielding between 2.84% and 2.91%. All of the securities pay interest at 5%. The offered bonds received a rating of A2 from Moody’s Investors Service, A from S&P Global Ratings, and A from Fitch Ratings, which assigned a positive outlook.

“The Positive Outlook reflects LIPA’s improving leverage ratio and Fitch’s expectation that the gradual but consistent deleveraging trend that began in 2015 will continue through 2027,” according to Fitch.

LIPA is a state-owned company which distributes electricity to 3 million New Yorkers, primarily on Long Island. However, LIPA contracts external service providers to operate and maintain its electricity transmission system.

The issuance comes amid debate between LIPA and one of its external service providers, Public Service Enterprise Group (PSEG). PSEG serves 1.1 million customers on Long Island, according to New York’s REV Connect, an initiative of the New York State Energy Research and Development Authority.

Last week, PSEG Long Island submitted its proposed 2024 operating budget to LIPA. It called for $764 million in spending, a 22% increase over last year. Much of that increase is due to a proposed increase in hiring. The budget requests funding for 433 new full-time equivalent positions, a 17% increase over the company’s current headcount.

“Based on the information provided by PSEG Long Island to date, the Authority does not believe PSEG Long Island’s proposed 2024 Operating Budget requests are substantiated or that the proposed headcount levels could be achieved if approved,” according to the official statement accompanying the sale of the bonds.

The bonds are special obligations of the authority, payable by revenue from its electric system.

Wells Fargo Bank, NA served as lead underwriter on the issuance, purchasing the bonds at a discount of $2.5 million.

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