Fitch Ratings in August affirmed the rating on New York Power Authority obligations at “AA-“.
Specifically, Fitch affirmed the rating on:
• $592 million green transmission project revenue bonds, series 2022A;
• $734 million green transmission project revenue bonds, series 2023A.
The Rating Outlook on all bonds is Stable.
The "AA-" NYPA's transmission project revenue bond ratings reflect the limited security pledge supporting the bonds and the credit quality of NYPA's Separately Financed Transmission Project.
The SFTP was created to finance certain transmission assets separate from those funded pursuant to NYPA's general bond resolution.
Fitch said the credit quality of the SFTP is very strong. Leverage, measured as net adjusted debt/adjusted funds available for debt service (FADS), fell below 7.0x at YE 2024.
Fitch expects this to stabilize between 7.0x and 9.0x, absent additional debt-funded investment. Leverage ratios could rise over time if NYPA pursues additional investment. However, the authority's disciplined approach to funding and financial management should lead to financial ratios and an overall financial profile supportive of the current rating, it said.
"The SFTP benefits from very strong revenue defensibility and very low operating risk. Revenue defensibility is supported by resolution requirements that all costs related to transmission investments by the Project must be eligible for recovery pursuant to regulatory-approved tariffs. All of the SFTP transmission lines are within the state of New York (AA+/Stable), under oversight of the New York Independent System Operator (NYISO)," Fitch noted. Transmission charges are collected from a very broad customer base encompassing around 20 million electric users across the state.
Fitch expects unit operating costs related to transmission services to remain relatively stable and a very small portion of customer electric charges.
The SFTP project revenue bonds are payable solely from the net revenues or other income derived from the operation of the Project assets, and all funds and accounts established under the resolution. A debt service reserve fund requirement equal to the lesser of 10% of outstanding debt, maximum annual debt service or 125% of average annual debt service, is satisfied by a surety policy, the rating agency said.
