TVA Prices $1 Billion of 50-Year Global Power Bonds
March 30, 2006
Achieves Lowest Coupon Rate Ever on Largest 50-Year Transaction By U.S. Agency or Corporation
TVA has priced $1 billion of 50-year global power bonds in what records indicate is the largest 50-year transaction ever for a U.S. agency or corporate issuer with the lowest coupon rate ever achieved for a 50-year bond issue.
The bonds mature on April 1, 2056 and have a coupon rate of 5.375 percent. Merrill Lynch and Morgan Stanley are joint lead managers for the transaction.
“The shortage of high-quality ultra-long bonds in the market contributed to a very strong transaction,” said TVA’s Chief Financial Officer Michael Rescoe. “Investor presentations last week may have contributed to the demand for this transaction, allowing it to price in less than 24 hours.”
Although TVA has issued 50-year bonds, the transaction marks the first time TVA has issued a non-callable 50-year global bond. TVA investors include pension funds, insurance companies, foreign governments and institutions that typically have a need for highly rated investments.
“Demand for the bonds produced an order book that was more than twice the announced billion-dollar size,” said TVA Senior Vice President and Treasurer John Hoskins.
Proceeds from the sale will be used by TVA to refinance existing debt. The ultra-long maturity of the bonds combined with the low coupon rate will allow TVA to extend the average life of its financing portfolio while reducing its average cost of borrowing.
The bonds are rated “Aaa” by Moody’s Investors Service and “AAA” by Standard and Poor’s and Fitch Ratings. Interest will be paid semi-annually Oct. 1 and April 1, with the first interest payment to be made Oct. 1, 2006. The bonds are not callable prior to maturity.
TVA is listing 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 Euroclear and Clearstream.
TVA is a wholly owned federal corporation and the nation’s largest public power provider. It is completely self-financed. TVA provides power to large industries and 158 power distributors that serve approximately 8.6 million consumers in seven southeastern states.
Media Contact
TVA News Bureau, Knoxville, (865) 632-6000
Investor Contacts
TVA Investor Relations (toll-free), Knoxville, (888) 882-4975
TVA Investor Relations (toll-free International), (888) 882-4967
