TVA Prices $500 Million of 40-Year Global Power Bonds

January 17, 2008

TVA announced today that it has priced $500 million of 40-year global power bonds with a coupon rate of 4.875 percent. The bonds mature on Jan. 15, 2048.

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

Investors purchasing the bonds include pension funds, insurance companies and institutions that typically have a need for highly rated investments of a longer maturity, according to TVA Senior Vice President and Treasurer John Hoskins.

“TVA is pleased to be able to meet the needs of investors while securing such low-cost financing for its power program,” Hoskins said. “The combination of market conditions and demonstrated investor demand for longer-dated maturities indicated this transaction would be well received.”

Records indicate the coupon rate is among the lowest ever for bonds with a 40-year final maturity. The ultra-long term, 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, Hoskins said.

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 July 15 and Jan. 15, with the first interest payment to be made July 15, 2008. The bonds are not subject to redemption prior to maturity.

TVA is listing 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 can be identified by the CUSIP number 880591EB4.

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.

Media Contact

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

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