The Long Island Power Authority has scheduled a new $369 million debt refinancing and separate $350 million bond deal for this fall as part of its effort to generate savings in a lower interest rate environment.

LIPA trustees approved Wednesday $369 million in borrowing through its Utility Debt Securitization Authority planned for September that chief financial officer Joseph Branca said will provide roughly $37 million of saving of previous bonds issued when interest rates were higher. An additional $350 million bond sale from LIPA slated for October to fund system improvements will increase LIPA’s overall debt to $7.9 billion, from $7.73 billion at the end of 2016.

The Long Island Power Authority, which owns this natural gas generating plant in Northport, N.Y., is planning new bond sales this fall.
The Long Island Power Authority, which owns this natural gas generating plant in Northport, N.Y., is planning new bond sales this fall. Bloomberg News

After the September transaction through conduit issuer USDA, the public utility will have refinanced around $4.25 billion in old debt at better rates in five financings under a state program approved two years ago, Branca said during Wednesday’s meeting. The authority was authorized under 2015 legislation signed by New York Gov. Andrew Cuomo to restructure $4.5 billion of debt through the USDA.

“It’s been a pretty aggressive program in saving money for the ratepayers,” said Branca during the meeting of the USDA, whose bonds were rated triple-A during LIPA’s previous debt refinancing deals. “We’ve happened to hit historic low rates in interest rates and we’ve benefited from that through the USDA financing.”

Branca said during his presentation that despite keeping total debt “relatively flat” this year, LIPA will invest $682.6 million in long-term capital infrastructure during 2017. He said the utility currently has 147 days of cash on hand.

LIPA received its first credit rating upgrade in 11 years last August when Moody’s upped the utility’s senior revenue bonds to A3 from Baa1, after an approved three-year rate plan called for modest increases. S&P Global Ratings and Fitch Ratings both rate LIPA debt at A-minus.

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