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NYPA Approves the Issuance of up to $675 Million in Revenue Bonds to Support Relicensing Costs, Capital Improvements and Refunding Opportunities

Connie Cullen

September 25, 2007 


WHITE PLAINS—New York Power Authority (NYPA) trustees today authorized the issuance of the Series 2007 A (federally tax-exempt), Series 2007 B (federally taxable) and Series 2007 C (federally tax-exempt) fixed rate Revenue Bonds.

“This bond sale builds on the Power Authority’s history of efficient and effective operating practices that have been consistently recognized in a very positive way by the rating agencies,” said Frank S. McCullough, Jr., chairman, NYPA.  “We expect significant interest in the bond sale as it helps in financing long-term projects at two of New York’s most important generating facilities. Unlike many public entities, the Power Authority finances its programs and projects through the sale of bonds, as it uses no tax money or credit in its operations.”

The Series 2007 A and 2007 B Bonds are authorized up to an aggregate principal amount not to exceed $375 million.  The proceeds will be used to (i) finance costs for the Niagara Power Project relicensing program and the St. Lawrence-FDR Power Project relicensing and life extension modernization programs; (ii) refund outstanding Commercial Paper (CP) Notes previously issued to finance Niagara Project relicensing and upgrade costs; (iii) fund the cost of issuance of the bonds, and (iv) pay for termination amounts, if any, of terminating a forward starting floating to fixed interest rate swap entered into in January of 2006 for the purpose of hedging interest rate volatility in connection with the contemplated issuance of the 2006 B Bonds.  At this time, the 2006 swap had a positive mark-to-market value of $7 million in favor of NYPA’s customers.

The 2007 C Bonds are authorized up to an aggregate principal amount of $300 million.  The proceeds will be used to refund up to $278 million of the Series 2002A Revenue Bonds subject to achieving at the time of sale of the refunding bonds acceptable savings levels.  The refunding of the 2002 A Revenue Bonds is market sensitive.  The trustees also authorized a floating to fixed interest rate swap to lock in savings on the proposed 2007 C Bond issuance if NYPA, in consultation with its financial advisor, Public Financial Management, decides it is advantageous to do so.   

Current ratings assigned to NYPA are Aa2 by Moody’s Investors Service, AA- by Standard & Poor’s and AA by Fitch Ratings.  Moody’s has raised their outlook to Positive from Stable on NYPA’s Revenue Bonds.  Standard and Poor’s and Fitch’s Ratings have maintained a Stable outlook.

The federally tax-exempt 2007A Bonds are expected to be issued in a principal amount of approximately $100 million and the federally taxable 2007 B Bonds in a principal amount of approximately $240 million.  The trustees authorized up to $375 million to anticipate market conditions and fees to be determined at the time of sale.  The sizing of the federally tax-exempt 2007 C Bonds, if issued, will be determined based upon market conditions.

The proposed 2007 A and 2007 B Bonds are expected to amortize over 40 years with the 2007 B taxable bonds amortizing primarily during the first thirty-five years and the 2007 A tax-exempt bonds amortizing over the final five years.

A team of four underwriters led by Citigroup will market the 2007 Bonds.  The other underwriters are J.P. Morgan; Goldman, Sachs & Co., and Merrill Lynch & Co. The 2007 Bonds are tentatively scheduled for sale on October 10, 2007 and are expected to close on or about October 18, 2007. 


 About NYPA:

■    NYPA uses no tax money or state credit.  It finances its operations through the sale of bonds and revenues earned in large part through sales of electricity.  ■    NYPA is a leader in promoting energy-efficiency, new energy technologies and electric transportation initiatives.  ■    It is the nation’s largest state-owned electric utility, with 18 generating facilities in various parts of the state and more than 1,400 circuit-miles of transmission lines.

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