TVA Achieves Record Low Rate on a $1B 50-Year Power Bond Offering

September 22, 2015

KNOXVILLE, Tenn. — The Tennessee Valley Authority announced today it has priced $1billion of new 50-year global power bonds carrying an interest rate of 4.25%, setting a new record.

The bonds priced at a yield of 4.383%, which now stands as the lowest on record for a 50-year bond by any corporate or government agency issuer. Investor demand for high quality, long-term fixed-income investments, along with the persistently low interest rate environment, contributed to the success of the offering.

“TVA had a chance to secure low cost financing for an extended period, with interest rates still hovering near all-time lows,” said TVA’s Chief Financial Officer John Thomas. “Meeting the demand for yield and duration that 50-year bonds provide to investors, while locking in savings for TVA, made this a mutually beneficial opportunity.”

More than $1 trillion of investment grade fixed-income securities have been issued so far this year, less than one percent of which had a final maturity of 50 years or longer. TVA’s 50-year bond offering drew demand from money managers, insurance companies and a variety of other investors.

Bank of America Merrill Lynch, BNP Paribas, Morgan Stanley and TD Securities were joint book-running managers for the transaction. Proceeds from the sale will be used by TVA to refinance existing debt and for other power system purposes.

“TVA’s model has stood the test of time, and the demand for our transaction demonstrates continued confidence in TVA’s mission,” said TVA Vice President and Treasurer Tammy Wilson. “This financing will help TVA provide low cost, reliable power, support economic development, and meet our stewardship obligations for decades to come, just as we have for the past 82 years.”

The new bonds will mature on Sept. 15, 2065, and are not subject to redemption prior to maturity. Interest will be paid semi-annually each March 15 and September 15. Application is expected to be made 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 880591ES7.

The Tennessee Valley Authority is a corporate agency of the United States that provides electricity for business customers and local power companies serving more than 9 million people in parts of seven southeastern states. TVA receives no taxpayer funding, deriving virtually all of its revenues from sales of electricity. In addition to operating and investing its revenues in its electric system, TVA provides flood control, navigation and land management for the Tennessee River system and assists local power companies and state and local governments with economic development and job creation.

Investor Relations

Josh Carlon, Knoxville, 865-632-4133 or 888-882-4975

Clifton Lowry, Knoxville, 865-632-6638 or 888-882-4975

Contact

Gail Rymer
TVA Public Relations, Knoxville, (865) 632-6000

tvainfo@tva.gov
(865) 632-2911
Knoxville, TN