Issuer: Long Island Power Authority
Date: May 1998
Amount: $5 billion
Financial advisor: Goldman Sachs
Lead managers : Bear Stearns, Lehman Brothers, JP Morgan, Merrill Lynch, Paine Webber
The fixed-rate tranche of Long Island Power Authority’s (LIPA) financing in May was the largest single issue of tax-exempt bonds ever sold in one day. The $3.5 billion issue had over $17 billion of demand, most of which came through over three hours of one morning. David Warren, chief financial officer for LIPA says: “It was a much awaited issue. There was a huge build-up, everyone knew about it. It was a new credit, a new New York credit. People were actually saving up for it.”
Sold in $5,000 denominations mainly to institutional investors, funds and corporations in the tax-exempt market, the deal was hugely successful and more than a little complicated. Warren continues: “Everywhere you looked there was something new going on that had never been done before. We were pitching a new utility to rating agencies and investors. We had over 100 people on our team at times, all going in different directions every day.”
The combined financing for this deal enabled LIPA to buy various assets from the Long Island Lighting Company (LILCO), among them was the transmission and distribution of electricity from the power station for Long Island.