Fitch Rates LIPA's (NY) Electric System Revs 2015 GR-2 'F1+'; GR-3 'F1'

NEW YORK--()--Fitch Ratings assigns a rating of 'F1+' to the $75,000,000 Long Island Power Authority (LIPA) electric system general revenue notes, series 2015 GR-2 notes, consisting of: GR-2A (Federally Taxable) and GR-2B (Tax-exempt) notes. Fitch also assigns a 'F1' rating to the $50,000,000 series 2015 GR-3 notes, consisting of GR-3A (Federally Taxable) and GR-3B (Tax-exempt).

KEY RATING DRIVERS:

The 'F1+' rating assigned to the GR-2 notes is based on the support provided by an irrevocable direct- pay letter of credit (LOC) issued by Bank of Montreal (BMO, rated 'AA-/F1+' with a Stable Outlook by Fitch). The 'F1' rating assigned to the GR-3 notes is based on the support provided by a LOC issued by Citibank, N.A. (Citi, rated 'A/F1' with a Stable Outlook). Each LOC provides coverage for the principal amount of the notes and interest due on the notes.

The short- term 'F1+' rating assigned to the GR-2 notes will expire on the earlier of March 30, 2018, the stated expiration date of the BMO LOC or upon any prior termination of the BMO LOC. The short-term 'F1' rating on the GR-3 notes will expire on the earlier of March 30, 2018, the stated expiration date of the Citi LOC, or upon any prior termination of the Citi LOC.

Each series 2015 GR note shall have a maturity date no earlier than 271 days and no later than 275 days from the date of issuance. However, all such notes are subject to redemption on a date selected by LIPA at the time of its issuance ("Noticed Redemption Date") at a redemption price equal to the principal amount of such Series 2015 GR note, plus accrued and unpaid interest thereon. The Noticed Redemption Date for any series 2015 GR note shall be no earlier than one day and no later than 270 days from the date of issuance of such Series 2015 GR note.

The Bank of New York Mellon, acting as Issuing and Paying Agent (IPA) for the notes, is directed to request an advance under the respective LOC to pay principal and interest on maturing notes or on a Noticed Redemption Date. Each of the respective LOCs provide sufficient coverage for the principal amount of notes authorized under the related series and 275 days of interest calculated at 10% based on a 360 day year.

Following the occurrence of an event of default under a specified LOC and Reimbursement Agreement, the related bank may direct the IPA to immediately stop the issuance of any additional notes. The related bank will also notify the IPA that the stated amount of the LOC shall be reduced to an amount equal to the principal amount of notes then outstanding plus interest payable on the notes. The related bank may also issue a final drawing notice directing the IPA to draw on its LOC for the principal and interest amount due on all outstanding notes.

The dealer for the GR-2 notes is BMO Capital Markets GK ST Inc. Wells Fargo Securities is the dealer for the GR-3 notes. The notes are expected to be available on or about March 30, 2015.

RATING SENSITIVITIES:

The ratings for the notes are exclusively tied to the short-term rating that Fitch maintains on the bank providing the LOC and will reflect all changes to the rating.

Additional information is available at www.fitchratings.com.

Applicable Criteria and Related Research:

--'U.S. Municipal Structured Finance Criteria' (Feb. 27, 2015);

--'Rating Guidelines for Letter of Credit Supported Bonds and Commercial Paper' (June 2, 2014).

Applicable Criteria and Related Research:

U.S. Municipal Structured Finance Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=862222

Rating Guidelines for Letter of Credit-Supported Bonds and Commercial Paper

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=749431

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=982031

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

Contacts

Fitch Ratings
Primary Analyst
Linda Friedman
Senior Director
+1 212-908-0727
Fitch Ratings, Inc., 33 Whitehall Street, New York, NY 10004
or
Secondary Analyst
Vincent Barberio
Managing Director
+1 212-908-0505
or
Committee Chairperson
Joseph Staffa
Senior Director
+1 212-908-0829
or
Media Relations:
Elizabeth Fogerty, +1 212-908-0526
elizabeth.fogerty@fitchratings.com

Contacts

Fitch Ratings
Primary Analyst
Linda Friedman
Senior Director
+1 212-908-0727
Fitch Ratings, Inc., 33 Whitehall Street, New York, NY 10004
or
Secondary Analyst
Vincent Barberio
Managing Director
+1 212-908-0505
or
Committee Chairperson
Joseph Staffa
Senior Director
+1 212-908-0829
or
Media Relations:
Elizabeth Fogerty, +1 212-908-0526
elizabeth.fogerty@fitchratings.com