Moody’s Ratings and the Kroll Bond Rating Agency have both upgraded their ratings on the New York Power Authority’s revenue bonds.
Moody’s upgraded its rating to Aa1 from Aa2 -- the firm’s equivalent of upgrading to AA+ from AA -- and KBRA upgraded its rating assigned to the bonds to AA+ from AA.
“These credit rating upgrades reflect the Power Authority’s continued operational success, financial strength and vigilance in risk management,” said NYPA President and CEO Justin Driscoll. “Strong credit ratings signal the market’s confidence, lower borrowing costs for NYPA and allow us to leverage the capital markets so we can continue to provide low-cost, reliable and renewable electricity while we work to achieve our decarbonization objectives.”
Moody’s also upgraded NYPA’s transmission bonds affiliated with separately financed projects (SFP) to Aa3 from A1.
In its decision to upgrade the NYPA bond ratings, Moody’s cited the Power Authority’s “very strong financial and operating performance, the increased revenue diversification relating to the growth of transmission investments through SFP within the NYPA family and the sound credit profile of the State of New York.”
KBRA notes that the Power Authority “benefits from a sophisticated and proactive management team with industry-leading enterprise risk management capabilities.”
The rating upgrades were published ahead of an action taken on Sept. 17 by the NYPA Board of Trustees to approve the issuance of up to $400 million in new green bonds.
NYPA will market the General Revenue Green Bonds beginning next week.
Fitch Rates New York Power Authority Bonds “AA,” Outlook Stable
Meanwhile, Fitch Ratings on Sept. 13 said it had assigned an "AA" rating to NYPA’s approximately $400 million senior lien revenue bonds, Series 2024A (Green Bonds).
The Rating Outlook is Stable.
In addition, Fitch has affirmed the ratings on the following NYPA obligations:
- $1.25 billion senior lien revenue bonds at 'AA';
- $0.6 million subordinate notes (series 2012) at 'AA';
- $950 million maximum authorized commercial paper program at 'F1+';
- $200 million maximum extendible municipal commercial paper program (EMCP) at 'F1+';
- Issuer Default Rating (IDR) at 'AA'.
"The ratings on NYPA's revenue obligations supporting its power supply system, and issued pursuant to its general resolution, reflect very low financial leverage in the context of strong revenue defensibility and low operating risk profile," Fitch said.
NYPA's power supply system includes all of the authority's operations, except for those financed pursuant to the authority's separately financed transmission project (SFTP; Transmission Project Revenue Bonds, rated AA-/Stable).
"The strength of the power supply system's revenue defensibility is rooted in its extremely low-cost and competitive hydroelectric resources, but is constrained by a contractual framework that includes power sales arrangements with expiration dates before the final maturity of its debt, and which may be terminated under certain circumstances," Fitch said.
The system's operating risk profile is bolstered by the positive effect of its low-cost hydroelectric resources on its operating cost burden, the rating agency noted.
Fitch said that NYPA's consolidated (including the SFTP) financial leverage, measured as net adjusted debt to adjusted funds available for debt service, totaled 3.8x in 2023 and remains in line with historical ratios despite additional debt issuance, "largely as a result of higher than average hydroelectric production, solid margins on energy sales and strong, sustained funds available for debt service. Ratios related to the power supply system were even lower. Liquidity measures across the authority remain robust."
NYPA's consolidated capital plan "continues to be sizable, with heavy investments in transmission, continued modernization of the hydropower facilities and investments in advanced energy technologies needed to support the state's aggressive clean energy goals," Fitch said.
Although leverage is expected to drift higher through 2027, ratios related to the power supply system should remain below 4.0x even under Fitch's stress scenario and supportive of the current rating.
The 'F1+' rating on NYPA's traditional and extendible municipal commercial paper programs reflects NYPA's "AA" Long-Term IDR and adequate liquidity, both through unrestricted cash balances and available short-term liquidity facilities sufficient to repay commercial paper notes in the event of a failed remarketing.
