Fitch Ratings has assigned an “A+” rating to various Long Island Power Authority bonds.
Specifically, Fitch assigned an “A+” rating to:
• Approximately $516 million electric system general revenue bonds series 2025A;
• Approximately $250 million electric system general revenue bonds series 2025B (fixed rate mandatory tender bonds); and
• Approximately $150 million electric system variable rate demand general revenue bonds series 2025C (underlying rating).
Fitch has also assigned an “A+” bank bond rating to the 2025C bonds. The bank bond rating is assigned to the 2025C bonds but will only become applicable if the bonds cannot be remarketed and are purchased by the bank providing the liquidity facility.
Proceeds of the series 2025A and 2025B bonds will be used to fund system improvements, refund certain outstanding bonds and pay the costs of issuance.
The series 2025A bonds will be sold with a fixed rate and amortize through 2055.
The series 2025B bonds will be issued as multi-modal bonds and initially sold with a fixed interest rate through the mandatory tender date.
The series 2025C bonds will be issued to refund certain outstanding debt of the authority and pay issuance costs.
The 2025A and 2025B bonds were expected to price the week of Aug. 11, 2025.
Fitch has additionally affirmed LIPA's Issuer Default Rating (IDR) and the following outstanding bonds at “A+”:
• Approximately $5 billion senior-lien electric system revenue and refunding bonds.
The Rating Outlook is Stable.
LIPA's “A+” IDR and bond ratings reflects its improved leverage ratio and Fitch's expectation that the gradual but consistent deleveraging trend that began in 2015 will continue through 2028.
Leverage, measured by net adjusted debt to adjusted funds available for debt service (FADS), improved to 7.1x at YE 2024 from 8.8x in 2019, from slightly stronger FADS and lower net adjusted debt.
The results for 2024 are better than previously expected, and the overall improvement is in part attributable to LIPA's strategy of budgeting to achieve higher fixed-obligation coverage, Fitch said.
LIPA's operating income is expected to remain strong in 2025, although results may be slightly lower than achieved the previous year, Fitch said.
LIPA's leverage ratio is projected to increase slightly in 2025 relative to 2024 but trend toward 7.0x through 2028, which is consistent with the “A+” rating.
This trend continues to benefit from LIPA's revenue-decoupling mechanism (RDM), timely cost recovery and modest but consistent rate increases designed to achieve higher fixed-obligation coverage, Fitch said.
“LIPA's very strong service area, disciplined rate setting approach and authorized RDM should sustain its very strong revenue defensibility and overall performance even through periods of stress, further supporting its financial profile,” Fitch said.
LIPA's operating cost burden remains comparatively high within the sector. Ongoing efforts to moderate costs and operating risk under an updated operating services agreement (OSA) with system operator PSEG Long Island (PSEGLI) are reasonably successful and factored in the rating, the rating agency said.
LIPA expects to continue outsourcing the operation of the system after the current OSA's expiration at YE 2025 and is in the early stages of negotiating an extension with PSEGLI. The original agreement contains an extension for up to an additional five years upon mutual agreement by both parties, Fitch noted.
A new CEO with more than two decades of relevant utility and management experience was hired in June 2025, Fitch noted. LIPA’s Board of Trustees appointed Carrie Meek Gallagher as Chief Executive Officer, effective July 7, 2025.
