The Long Island Power Authority authorized $900 million of tax-exempt general revenue bonds at its monthly board meeting yesterday.
Of the total, $210 million would be new money. The remaining $690 million would be used to refund variable-rate demand bonds and auction-rate securities insured by Financial Security Assurance Inc. and MBIA Insurance Corp.
The refunding could be fixed- or variable-rate, depending on market conditions, said LIPA chief financial officer Elizabeth McCarthy. A date for the deal hasn't been set and will have to be first approved by the New York Public Authorities Control Board in November.
LIPA also intends to go to market with a previously authorized $369 million refunding of variable-rate bonds that are insured by FSA and MBIA as soon as next week. Those will likely be fixed rate. On Wednesday, the PACB voted to increase the maximum interest rates allowed on the refunding to 8.5% from 6.5%.
Despite interest rate spikes in the variable-rate market this year, the authority expects that debt service will come in at budget, McCarthy said.
LIPA will choose lead underwriters from its pool, which includes Citi, Goldman, Sachs & Co., and Morgan Stanley.
Earlier this month, LIPA sold $605 million of electric system revenue bonds.
The authority has an underlying rating of A3 from Moody's Investors Service and A-minus by both Standard & Poor's and Fitch Ratings.
