New York Power Authority preps $1.1B sale including its first green bonds

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The New York Power Authority returns to the market Wednesday after a multi-year absence, with a $1.1 billion bond offering including its first-ever green bonds.

Goldman Sachs serves as senior manager on NYPA's first long-term bond deal since 2015, an offering of roughly $1 billion of tax-exempt series 2020A bonds and approximately $110 million of federally taxable series 2020B bonds.

“It’s critical for NYPA to be in a position to lead by example in the responsible reopening of the state’s economy," says Gil C. Quiniones, president and CEO of the New York Power Authority.

At least $750 million of the series 2020A bonds will be designated as green bonds, specifically earmarked for climate and environmental projects. NYPA uses clean renewable hydropower for more than 70% of its electricity.

The sale will help the power authority transmit clean energy throughout the state and lay the foundation for a future digital grid, according to Gil C. Quiniones, NYPA president and CEO. He stressed the timing of the deal is important, given Gov. Andrew Cuomo’s goal of gradually reopening the state’s economy in stages beginning May 15 following a shutdown of non-essential businesses last month in an effort to contain the spread of COVID-19.

“It’s critical for NYPA to be in a position to lead by example in the responsible reopening of the state’s economy and the governor’s reimagining of how New Yorkers will work moving forward,” Quiniones said in a statement. “As we look to resume construction and manufacturing activities — especially in upstate New York — NYPA will hit the ground running and continue to support the state with the production and transmission of clean energy.”

NYPA’s rating was affirmed ahead of the sale by Moody’s Investors Service, S&P Global Ratings and Fitch Ratings. S&P and Fitch both rate NYPA AA with a stable outlook. Moody’s rates the utility one notch higher at Aa1 with a negative outlook.

Fitch analyst Dennis Pidherny noted NYPA’s lower electricity demand as a result of the COVID-19 pademic would likely slightly weaken financial conditions, but the authority will still be strongly positioned because of healthy liquidity.

NYPA is projected to have the equivalent of 377 days of cash on hand after the bond financing, the agency’s CFO Adam Barsky said during an April 21 road show presentation.

“As a well established utility with diverse business lines and strong financial and risk management policies, NYPA is able to weather temporary changes to its business conditions,” Barsky said. “In light of the COVID pandemic the authority has proactively taken measures to sustain its core operations.”

Public Financial Management is the municipal advisor for the deal. Hawkins Delafield & Wood LLP and Bryant Rabbino LLP serve as bond counsel.

NYPA is the nation's largest public power organization with 16 generating facilities and more than 1,400 circuit-miles of transmission lines. Last year, NYPA became the first North American electric utility to receive certification from the International Organization for Standardization, given to organizations meeting the most rigorous asset management standards. At the end of 2019, it had $643 million of outstanding bond debt.

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