National Grid 2013 Annual Report Download - page 54

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First Mortgage Bonds
The assets of Colonial Gas and Narragansett are subject to liens and other charges and are provided as collateral over
borrowings of $75 million and $53 million, respectively, of non-callable First Mortgage Bonds (“FMB”). These FMB
indentures include, among other provisions, limitations on the issuance of long-term debt. Interest rates range from
6.82% to 9.63% and maturity dates range from 2018 to 2028.
State Authority Financing Bonds
At March 31, 2013, the Company had outstanding $1.2 billion of State Authority Financing Bonds. Of the $1.2 billion
outstanding at March 31, 2013, approximately $716 million of these bonds were issued through NYSERDA and the
remaining $484 million were issued through various other state agencies.
Approximately $650 million of State Authority Financing Bonds were issued to secure a like amount of tax-exempt
revenue bonds issued by NYSERDA. Approximately $575 million of such securities bear interest at short-term
adjustable interest rates (with an option to convert to other rates, including a fixed interest rate) ranging from 0.42% to
0.73% for the year ended March 31, 2013. The bonds are currently in auction rate mode and are backed by bond
insurance. These bonds cannot be put back to the Company and in the case of a failed auction, the resulting interest rate
on the bonds revert to the maximum rate which depends on the current appropriate, short-term benchmark rate and the
senior secured rating of the Company or the bond insurer, whichever is greater. The effect on interest expense has not
been material to date.
The Company also has $75 million of 5.15% fixed rate pollution control revenue bonds issued through NYSERDA
which are callable at par. Pursuant to agreements between NYSERDA and the Company, proceeds from such issues
were used for the purpose of financing the construction of certain pollution control facilities at the Company’ s generation
facilities (which the Company subsequently sold) or to refund outstanding tax-exempt bonds and notes.
Additionally, the Company has $41 million of 1999 Series A Pollution Control Revenue Bonds due October 1, 2028.
The interest rate ranged from 0.25% to 1.60% for the year ended March 31, 2013, at which time the rate was 0.61%. The
interest rate ranged from 0.35% to 3.00% for the year ended March 31, 2012, at which time the rate was 0.97%. Interest
expense related to these notes for each of the years ended March 31, 2013 and March 31, 2012 was approximately $0.5
million and $0.7 million, respectively.
We also have outstanding $25 million variable rate 1997 Series A Electric Facilities Revenue Bonds due December 1,
2027. The interest rate on these bonds is reset weekly and ranged from 0.10% to 0.27% and from 0.07% to 0.28% during
the years ended March 31, 2013 and March 31, 2012, respectively. The interest rate was 0.12% and 0.20% at March 31,
2013 and March 31, 2012, respectively. Interest expense related to these notes for each of the years ended March 31,
2013 and March 31, 2012 was approximately $0.1 million.
At March 31, 2013, the Company had outstanding $430 million of the Pollution Control Revenue Bonds in tax exempt
commercial paper mode with maturity dates ranging from October 2015 to October 2022 and variable interest ranging
from 0.35% to 0.90% for the year ended March 31, 2013. In addition, at March 31, 2013, the Company had $52 million
of tax exempt Electric Revenue Bonds in commercial paper mode with varying maturity dates from 2016 through 2042
and variable interest rates ranging from 0.38% to 0.55% during the year ended March 31, 2013. The bonds were issued
by the Massachusetts Development Finance Agency in connection with the Company’ s financing of its first and second
underground and submarine cable projects. Sinking fund payments of $275 thousand were made during the year ended
March 31, 2013.
At March 31, 2012, three of the Company’ s subsidiaries had a Standby Bond Purchase Agreement (“SBPA”) totaling
$500 million, which was due to expire in November 2012. On November 15, 2012, the Company amended the SBPA to
a maturity date of November 20, 2015 with a limit of $483 million. This agreement was available to provide liquidity
support for $483 million of the Company’ s long-term bonds in tax-exempt commercial paper mode. The Company has
classified this debt as long-term due to its intent and ability to refinance the debt on a long-term basis in the event of a
failure to remarket the bonds. NGUSA, together with other affiliates of National Grid plc, has rights to issue debt under
an $850 million syndicated revolving credit facility which can be drawn upon at any time until its maturity in November
2015 and may be used, if needed, to refinance the tax-exempt commercial paper on a long-term basis. This facility has a
number of financial and non-financial covenants which the Company is obliged to meet. At March 31, 2013 and March
31, 2012, the Company was in compliance with all covenants.