TVA Prices $1.5 Billion of 30-Year Global Power Bonds

Sept. 17, 2009

TVA priced $1.5 billion of global power bonds this week with an interest rate of 5.25 percent. The bonds mature on Sept. 15, 2039.

 Banc of America Securities and Barclays Capital are joint book-running managers for the transaction. Citigroup, Deutsche Bank, Goldman Sachs, Jefferies & Company and Morgan Stanley are co-managers. Proceeds from the sale will be used by TVA to refinance existing debt.

Investors that purchased the bonds included money managers, insurance companies, pension funds and other institutions that typically have a need for highly rated investments.

“We were pleased to see very strong demand for this transaction,” said TVA Senior Vice President and Treasurer John Hoskins. “Investors have indicated a need for large long-term bond transactions that trade well in the secondary market, and TVA saw an opportunity to respond to that need.”

Orders for the bonds totaled more than $5 billion, and TVA decided to increase its offering from $1 billion to $1.5 billion. The relative scarcity of longer maturity bonds, and strong demand for the TVA name contributed to the success of the transaction and low interest rate, according to Hoskins.

“This financing adds to a portfolio of transactions done in recent years that will benefit TVA and its power customers by helping to lock in low interest rates for decades to come,” he 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 March 15 and Sept. 15, with the first interest payment in March 2010. The bonds are not subject to redemption prior to maturity.

TVA is applying to list 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 Clearstream and Euroclear. The bonds can be identified by the CUSIP number 880591EH1.

TVA is the nation’s largest public power provider and is completely self-financing. TVA provides power to large industries and 158 power distributors that serve approximately 9 million consumers in seven southeastern states. TVA also creates economic development opportunities and manages the Tennessee River and its tributaries to provide multiple benefits, including flood damage reduction, navigation, water quality and recreation.

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