Get the latest news and trends on Long Island companies and the people behind them.
Moody's may downgrade LIPA credit rating
Moody's Investor Service said Monday it will review the credit rating of the Long Island Power Authority for a possible downgrade, citing the recent slew of trustee resignations, the cost to repair damaged systems after superstorm Sandy, and weak financial standing as its main concerns.
LIPA currently has an A3 credit rating, or upper medium investment grade. The utility has faced severe criticism from authorities and customers for its handling of widespread power outages after Sandy.
The recent LIPA board departures leaves the utility with eight board members, "the bare minimum number of trustees needed to take action, and a potential vacuum of leadership at this most critical juncture following superstorm Sandy," Moody's analysts said in a report.
Moody's pointed to the $950 million cost estimate for repairs post-Sandy, and LIPA's liquidity problems as worrying, and noted that unless "substantial concrete actions to improve financial strength" are taken, "the rating is likely to move downward."
A downgrade would affect the A3 rating on about $6 billion in senior lien Electric System Revenue Bonds, the Baa1 rating on $550 million subordinate lien revenue bonds, and the Baa2 rating on LIPA's $155 million third lien in New York State Energy Research and Development Authority bonds.