TVA Sets Record For Low-Cost Borrowing

August 7, 2012

KNOXVILLE, Tenn. - The Tennessee Valley Authority has priced $1 billion of 10-year global power bonds at a yield of 1.97 percent (bearing an interest rate of 1.875 percent) ― the lowest interest rate ever on a TVA long-term bond. 

Records indicate that TVA is the first investment grade borrower aside from the U.S. Treasury to price a 10-year bond with a yield below 2 percent.

TVA issued the 10-year bond on Monday to take advantage of the historically low interest rate environment for use to pay down short-term debt and for other corporate purposes. TVA receives no funding from taxpayers, and pays its own way with revenues from power sales and power program financings.

“Achieving a record low interest rate allows us to keep power rates low while we continue to deliver reliable power to our customers, and supports our vision to be a leading provider of lower-cost, cleaner energy by 2020,” Chief Financial Officer John Thomas said. 

The transaction benefitted from strong investor demand, with orders from a variety of institutional investors in the U.S. and abroad. Bank of America Merrill Lynch, Morgan Stanley and RBS were joint book-running managers for the offering. 

The new bonds mature on Aug. 15, 2022, and are not subject to redemption prior to maturity. Interest will be paid semi-annually each Aug.15 and Feb. 15. Application has 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. Transactions may be cleared and settled by international participants through Clearstream and Euroclear. The bonds can be identified by the CUSIP number 880591EN8.

TVA provides electricity for utility and business customers in most of Tennessee and parts of Alabama, Mississippi, Kentucky, Georgia, North Carolina and Virginia to a population of over 9 million people.

Media Contact

Duncan Mansfield, Knoxville, (865) 632-4660
TVA Public Relations & Corporate Information
Knoxville, (865) 632-6000
www.tva.com/news

Investor Relations Contact

Ann Storberg, Knoxville, (865) 632-4425 or (888) 882-4975