Bonds and Financing

TVA sets new record for lowest-cost borrowing

The Tennessee Valley Authority on May 6 announced that it priced $1 billion of new five-year maturity global power bonds carrying an interest rate of 0.75%. The offering marks a TVA record for the lowest interest rate ever achieved on a bond issuance.

TVA announced the five-year offering to take advantage of the historically low interest rate environment and meet its ongoing funding needs, it noted.

The proceeds will be used to refinance existing debt and for general power system purposes. The new bonds will result in $15 million in lower annual interest expense as compared to the $1 billion of bonds that matured in March.

“It is a historic opportunity to borrow money for less than 1%, and I am proud of what we accomplished. We were patient and waited for the markets to settle down from the initial panic related to the pandemic, and it turned out to be a good decision,” said TVA’s Treasurer and Chief Risk Officer, Tammy Wilson. “TVA is self-funded and not owned by shareholders, so the savings TVA locks in from today’s transaction flow directly to the benefit of our local power company partners and the 10 million people we collectively serve.”

TVA noted that its offering drew over $4 billion in interest from a variety of investor bases, including central banks, money managers, state governments, insurance companies, and others.

“The strong reception to today’s offering demonstrates confidence in TVA and the value we provide the investors that have supported our funding program over the years,” Wilson said.

The new bonds will mature on May 15, 2025 and are not subject to redemption prior to maturity. Interest will be paid semi-annually each November 15 and May 15.

Application has been made to list the bonds on the New York Stock Exchange.