The Tennessee Valley Authority announced on Monday that it priced $1 billion of new two-year maturity global power bonds carrying an interest rate of 2.25%.
The offering marked TVA’s first offering of a two-year maturity in over 20 years, and the first maturity inside of five years since 2013. Proceeds from the sale will be used by TVA to refinance existing debt and for general power system purposes.
“The proceeds from today’s offering will refinance other debt maturing this year, but at a lower rate,” said TVA’s Chief Financial Officer John Thomas.
“The two-year maturity also fits well in TVA’s debt profile, and will give us greater flexibility in managing obligations in the coming years.”
Bank of America Merrill Lynch, Barclays Capital, Morgan Stanley, and TD Securities served as joint book-running managers for the transaction. TVA’s new bonds drew demand from money managers, governments, insurance companies, and a variety of other investors.
“We were pleased to see a pocket of stability in the market, giving us a window to move forward with today’s offering,” said Tammy Wilson, TVA’s vice president, treasurer and Chief Risk Officer. “TVA is known for longer-term offerings, but can issue bonds across the curve, and we were pleased to see strong interest from investors who focus on shorter maturities.”
The new bonds will mature on March 15, 2020, and are not subject to redemption prior to maturity. Interest will be paid semi-annually each March 15 and Sept. 15. Application will 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 880591 EV0 (ISIN number US880591EV09).