New York Power's green deal creates a buzz

This article is part of a series spotlighting The Bond Buyer’s ten 2020 Deal of the Year award winners, running from December 9 through 15. One of these honorees will be chosen as our national Deal of the Year at a virtual event taking place December 16. For more information on the Deal of the Year winners and how to obtain a complimentary pass for the virtual event, click here.

The Power Authority of the State of New York’s return to the market in April featured a $1.23 billion offering including its first-ever green bonds.

And it did so during the height of the COVID-19 pandemic.

The Series 2020 issuance, which included $791.6 million of green bonds — the authority’s first such issuance — represented the largest public power green-bond transaction ever and earned it The Bond Buyer’s Deal of the Year award for the Northeast region.

Goldman Sachs was lead manager for the April 29 transaction, NYPA’s first long-term bond deal since 2015.

The deal featured $1.12 billion of Series 2020A tax-exempt bonds and $114 million of Series 2020B taxable bonds. S&P Global Ratings and Fitch Ratings both rate NYPA AA with a stable outlook, while Moody’s Investors Service rated the utility one notch higher at Aa1 with a negative outlook.

NYPA set aside $900 million for a Life Extension and Modernization (LEM) project at the Robert Moses Niagara Hydroelectric plant; the Moses-Adirondack Smart Path Reliability Project — a transmission build — and other new transmission facilities for integrating additional amounts of renewable energy on the power grid.

Niagara meets nearly 10% of the state’s electric power needs.

“NYPA’s role is to be that utility to try things first, to do the things that can really advance our energy and environmental policies here in New York,” President and Chief Executive Gil Quiniones said on a Bond Buyer podcast.

While it marked the first New York state financing and one of the first public power deals to come to market after the onset of the coronavirus-induced market shutdown, this transaction was the largest public power deal of 2020.

NYPA was able to continue to power its long-term customers, which include the state and New York City, the Metropolitan Transportation Authority, New York City Health + Hospitals, plus municipal utilities and industrial customers.

The authority boosted its near-term liquidity by more than $1 billion.

“We actually started early when it came to our response to the COVID pandemic,” Quiniones said. In January, the authority launched an internal task force to monitor developments in Asia and in Europe, and opened its emergency operations center in early March.

“We responded to it as NYPA but also as the largest state-owned electric utility,” he said. That included collaborating with peer agencies statewide on best practices and situational awareness, and fuel, materials and experts as needed.

NYPA also worked with power plants across the state, most of which are privately owned. “We just made sure that if we needed to help each other, that we could do that,” Quiniones said.

All-in true interest costs were 3.63% and 2.87% for the tax-exempt and taxable bonds, respectively, with respective amortizations running through 2060 and 2039.

“In addition to the green aspects of the transaction, the financing was structured to match debt service to the lifespan of the utility’s assets, including restructuring existing obligations, and creating greater flexibility to assist its customers during the height of the COVID-19 pandemic,” Goldman Sachs said in a statement.