The Tennessee Valley Authority priced $500 million in global power bonds this week in a reopening of its $1.5 billion 2009 Series C 5.25 percent, 30-year Global Power Bonds issued in September 2009. Strong demand and low absolute interest rates allowed TVA to issue the new bonds at an effective yield of 4.87 percent.
“Interest rates have been this low or lower than today only five percent of the time in the past 20 years,” TVA Interim Chief Financial Officer John Hoskins said. “The reopening was a great opportunity to lock in lower interest costs on a long-term basis.”
Bank of America, Merrill Lynch and Morgan Stanley are lead managers for the financing.
TVA will use proceeds from the sale to refinance existing debt and for other power system needs.
Investors that purchased the bonds include insurance companies, money managers, pension funds and other institutions that typically need highly rated investments.
“The order book for the transaction was high quality and the demand was strong,” Mr. Hoskins said. “The structure of the financing benefited TVA and also met the needs of our investors.”
The 2009 30-year bonds have top ratings of Aaa by Moody’s Investors Service and AAA by Standard and Poor’s and Fitch Ratings. The bonds mature on Sept. 15, 2039, and are not subject to redemption prior to that date. Interest will be paid semi-annually each March 15 and Sept. 15.
The bonds are listed on the New York Stock Exchange and are 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.