LIPA Issues ‘Build America Bonds’
The Long Island Power Authority (LIPA) issued $210 million Series B Build America Bonds. These bonds were authorized by the American Recovery and Reinvestment Act of the 2009 Stimulus Program to provide much needed funding for state and local governments at lower borrowing costs. The 2010 Series B bonds will allow LIPA to borrow at a historically low rate and will be used to fund capital expenditures of the Authority. The capital expenditures covered under the issuance of these bonds will permit LIPA to continue to invest in its transmission and distribution system in an effort to provide superior reliability and service to its customers.
Traditionally, tax-exempt bonds provide a critical source of capital for state and local governments, but the economy has sharply reduced their ability to access the capital markets. Supplementing this existing market, taxable Build America Bonds are designed to provide a federal subsidy for a portion of the borrowing costs of state and local governments, in order to stimulate the economy and encourage investments in infrastructure projects in 2009 and 2010.
“LIPA sought to take advantage of the Build America Bonds program because of the lower net borrowing costs, which is beneficial to LIPA and its customers,” said LIPA President and CEO Kevin S. Law. “Our recent credit upgrade by Fitch Rating Services also assisted LIPA with getting these historical low rates for our customers.”