TVA Prices $1 Billion of 10-Year Global Power Bonds

March 6, 2008

TVA announced today that it has priced $1 billion of global power bonds with a coupon rate of 4.50 percent. The bonds mature on April 1, 2018.

Lehman Brothers and Morgan Stanley are joint book-running managers for the transaction. Banc of America Securities and Merrill Lynch are co-managers. Proceeds from the sale will be used by TVA to refinance existing debt.

Strong international demand contributed positively to the transaction, and the bonds were purchased by a diverse group of investors including central banks, asset management companies and institutions with a need for highly rated investments, according to TVA Senior Vice President and Treasurer John Hoskins.

“TVA has benefited from responding quickly to favorable market conditions,” Hoskins said. “We were able to take advantage of a window of stability in a volatile market to lock in low-cost financing.”

The bonds are expected to be rated “Aaa” by Moody’s Investors Service and “AAA” by Fitch Ratings and Standard and Poor’s. Interest will be paid semi-annually on Oct. 1 and April 1, with the first interest payment to be made Oct. 1, 2008. The bonds are not subject to redemption prior to maturity.

TVA is applying to list the bonds on the New York Stock Exchange and the Luxembourg 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 are identified by the CUSIP number 880591EC2.

TVA is the nation’s largest public power provider and is completely self-financing. TVA provides power to large industries and 159 power distributors that serve approximately 8.8 million consumers in seven southeastern states. TVA also manages the Tennessee River and its tributaries to provide multiple benefits, including flood damage reduction, navigation, water quality and recreation.

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John Moulton, Knoxville, (865) 632-8048
TVA News Bureau, Knoxville, (865) 632-6000

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