The Bonds have been rated AAA/Aaa by S&P/Moody’s, based upon a Guarantee of the payment of principal and interest on the Bonds provided by the New York State Environmental Facilities Corporation (EFC) though its State Revolving Fund (SRF) program - the largest SRF program in the country, providing AAA-rated financial assistance to local governments and public entities to finance clean water and drinking water projects. The bonds are anticipated to price on July 30 and close on August 13.
The Bonds will be secured by a pledged of loan payments from residential energy efficiency loans issued through the GJGNY program totaling approximately $29.2 million in aggregate principal, and any available monies in the revolving loan fund established under the GJNGY program. Approximately 65% of the loan pool will be Direct Bill loans (borrower makes monthly payment to NYSERDA’s master loan servicer) and approximately 35% will be On-Bill Recovery loans (borrower repays through a charge on their utility bill). The Bonds will be sold as taxable Qualified Energy Conservation Bonds (QECBs), which provide a partial interest subsidy from the US Treasury. The bonds are structured with serial maturities in varying amounts with maturities of one to ten years, and a 15-year term bond which is callable at par after ten years, providing an average maturity of about 6.9 years. The QECB interest subsidies, coupled with the interest rate anticipated from the AAA rating, are expected to result in a net interest cost on the bonds well below 1%. The Bonds require NYSERDA to maintain a coverage ratio of Net Pledged Revenues (pledged loan payments plus pledged QECB interest subsidies less expenses for loan servicing, trustee and credit facility fees) of at least 110% of annual debt service, and have been structured to achieve a projected coverage ratio of 126%. Excess revenues are returned to the GJGNY revolving loan fund upon maintaining required coverage ratios. The EFC Guarantee requires NYSERDA to establish a Collateral Reserve Account held by a Custodian, funded with approximately $8.5 million in federal grant funds provided by the U.S. Department of Energy through its Better Buildings program, to reimburse EFC for any draws upon its Guarantee and to protect the assets of the SRF program; the balance of the account is reduced and returned to NYSERDA on a pro-rata basis with bond principal payments.
For your information, attached is the Investor Presentation and Preliminary Official Statement, also available on MuniBond Roadshow at: http://munios.com/rs/yf085
The Bonds are one of the first programmatic undertakings of the Green Bank within NYSERDA. Announced by Governor Cuomo in January 2013, the Green Bank will alleviate financial market barriers that currently impede the flow of private capital to clean energy projects.