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TVA Prices $1B 10-Year Power Bond Offering

Feb 7, 2017

KNOXVILLE, Tenn. — The Tennessee Valley Authority announced today that it has priced $1billion of 10-year global power bonds carrying an interest rate of 2.875%, taking advantage of the continued low interest rate environment and favorable market conditions.

The offering drew demand from money managers, central banks, insurance companies, and a variety of other investors, who buy high grade securities of this maturity. Investors in the United States and overseas participated in the transaction.

”Having the global market for TVA bonds is beneficial to us and our investor base. This week’s offering shows the confidence investors around the world place in TVA,” said TVA Treasurer and Chief Risk Officer, Tammy Wilson. “We are pleased to see interest from a wider number of accounts in this transaction.”

The bonds priced at a yield of 2.884%, which is the second lowest for TVA financings of the same maturity. Proceeds from the offering will be used to refinance existing debt. TVA last issued bonds with a 10-year maturity in 2014.  

“The strong demand from investors for quality assets and continued low rates contributed to a successful outcome for TVA,” said Wilson. “The new bonds fit well into TVA’s maturities profile and help us meet long-term corporate financing needs, while the low rate will reduce our financing costs.”

Bank of America Merrill Lynch, Barclays Capital Inc., Mizuho Securities USA Inc., and Morgan Stanley & Co., LLC, were joint book-running managers for the transaction. The new bonds will mature on Feb.1, 2027, and are not subject to redemption prior to maturity. Interest will be paid semi-annually each Feb. 1 and Aug. 1, starting Aug. 1, 2017.

Application is being made to list the bonds on the New York Stock Exchange. The bonds will be issued, maintained and transferred through the book-entry system of the Federal Reserve Banks. Transactions may be cleared and settled by international participants through Clearstream and Euroclear. The bonds can be identified by the CUSIP number 880591EU2.

The Tennessee Valley Authority is a corporate agency of the United States that provides electricity for business customers and local power distributors serving over more than 9 million people in parts of seven southeastern states. TVA receives no taxpayer funding, deriving virtually all of its revenues from sales of electricity. In addition to operating and investing its revenues in its electric system, TVA provides flood control, navigation and land management for the Tennessee River system and assists local power companies and state and local governments with economic development and job creation.


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