TVA Returns to Market with $1B 10-Year Power Bond Offering

News provided by

Sep 25, 2014, 01:44 ET

KNOXVILLE, Tenn., Sept. 25, 2014 /PRNewswire-USNewswire/ -- The Tennessee Valley Authority announced Wednesday that it has priced $1 billion of new 10-year global power bonds with an interest rate of 2.875 percent – TVA's first new 10-year power bond offering since 2012.

TVA receives no funding from taxpayers, and pays its own way with revenues from power sales and power program financings. The proceeds from the sale will be used to refinance existing debt or for other power system purposes.

"Favorable market conditions allowed us to take advantage of interest rates that are still near historical lows to lock in low-cost funding for TVA and our customers, while meeting market demand for high-grade investments," Vice President and Treasurer Tammy Wilson said. "Investors recognize that TVA's business model is sound, and that this is a rare opportunity to buy bonds of the highest quality, backed by one of the largest electric power systems in America."

The transaction benefitted from strong investor demand, with orders from a wide variety of both domestic and global institutional investors. Morgan Stanley, Bank of America Merrill Lynch, Barclays Capital and RBC Capital Markets were joint book-running managers for the transaction.

The new bonds mature on Sept. 15, 2024, and are not subject to redemption prior to maturity. Interest will be paid semi-annually each March 15 and Sept. 15. Application is expected to been made to list the bonds on the New York Stock Exchange. The bonds will also be issued, maintained and transferred through the book-entry system of the Federal Reserve Banks. The bonds can be identified by the CUSIP number 880591ER9.

The Tennessee Valley Authority is a corporate agency of the United States that provides electricity for business customers and local power companies serving 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.

Logo - http://photos.prnewswire.com/prnh/20100304/TVALOGO

SOURCE Tennessee Valley Authority