The Tennessee Valley Authority announced Tuesday that it has priced $1 billion of 10-year global power bonds carrying an interest rate of 2.875 percent, taking advantage of the continued low interest rate environment and favorable market conditions.
The offering drew demand from money managers, central banks, insurance companies, and a variety of other investors, who buy high grade securities of this maturity. Investors in the United States and overseas participated in the transaction.
”Having the global market for TVA bonds is beneficial to us and our investor base," said TVA Treasurer and Chief Risk Officer Tammy Wilson. "This week’s offering shows the confidence investors around the world place in TVA. We are pleased to see interest from a wider number of accounts in this transaction.”
The bonds priced at a yield of 2.884 percent, which is the second lowest for TVA financings of the same maturity. Proceeds from the offering will be used to refinance existing debt. TVA last issued bonds with a 10-year maturity in 2014.
“The strong demand from investors for quality assets and continued low rates contributed to a successful outcome for TVA,” said Ms. Wilson. “The new bonds fit well into TVA’s maturities profile and help us meet long-term corporate financing needs, while the low rate will reduce our financing costs.”
Bank of America Merrill Lynch, Barclays Capital Inc., Mizuho Securities USA Inc., and Morgan Stanley & Co., LLC, were joint book-running managers for the transaction. The new bonds will mature on Feb.1, 2027, and are not subject to redemption prior to maturity. Interest will be paid semi-annually each Feb. 1 and Aug. 1, starting Aug. 1, 2017.
Application is being 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 880591EU2.