The Long Island Power Authority's finance committee yesterday selected Public Financial Management Inc. to serve as financial adviser for four years. Their appointment will go before the full board for approval on March 26.
PFM has been LIPA's interim financial adviser since April, following the implosion and absorption by JPMorgan of their former adviser, Bear, Stearns & Co. The firm was chosen from among five that responded to a request for proposals.
"We thought that they were best suited to fulfill our needs because of their in-depth knowledge and understanding of the authority and its significant experience in serving large public power entities, as well as just experience in New York," said LIPA chief financial officer Elizabeth McCarthy.
Pending board approval, the authoritywill pay the firm a $70,000 monthly retainer. The term can be terminated by LIPA upon written notice.
McCarthy said that although the authority has no immediate plans to take any actions regarding its swaps, "clearly having people in the group that were knowledgeable about derivatives was an important part of the evaluation."
LIPA has swaps outstanding with a notional amount of about $1.95 billion with a market-to-market value of negative $497.7 million as of Dec. 31.
The authority last went to market with a $435.8 million deal in January. About $205 million of that deal was new money and the remainder was used for issuance costs and refunding. That issue took care of LIPA's new-money needs for 2009.
The deal priced on Jan. 15 with maturities out to 2039. The 2039 maturity yielded 5.87% on a 5.75% coupon and bonds due in 2014, the shortest maturity, yielded 2.98% on a 3% coupon.
About 85% of LIPA's $6.71 billion of outstanding senior and subordinate debt is now fixed rate. The agency refunded close to $1 billion of auction-rate securities last year. It does not have any plans to refund or convert additional debt this year but it continues to monitor the market for opportunities, McCarthy said.
LIPA delayed posting a Webcast of the finance committee meeting on its Web site yesterday to allow time to contact firms that had responded to the RFP, McCarthy said.
The authority owns and operates the electric transmission system in Nassau and Suffolk counties as a well as a small part of Queens, serving 1.15 million customers.
A replacement has not been announced for McCarthy, who resigned last month. McCarthy, who has been CFO since 2003, said that her last day has not yet been set.