The Tennessee Valley Authority priced $1 billion of bonds Monday at its lowest interest rate ever on a long-term note.
The 10-year global power bonds were priced Monday at an interest rate average of 1.875 percent. Monday's bond sale was the first ever for long-term TVA bonds priced below 2 percent. TVA will use the proceeds to pay off higher-priced debt and to fund its ongoing construction of Watts Bar Unit 2.
"Achieving a record low interest rate allows us to keep power rates low while we continue to deliver reliable power to our customers, and supports our vision to be a leading provider of lower-cost, cleaner energy by 2020," TVA Chief Financial Officer John Thomas said in a statement today.
Fitch reaffirmed its AAA rating of TVA bonds in advance of the bond sale. Although TVA is an independent, self-funding federal agency, it enjoys the implied backing of the federal treasury.
The transaction benefited from strong investor demand in the U.S. and abroad and was managed by Bank of America Merrill Lynch, Morgan Stanley and RBS.
The new bonds mature on Aug. 15, 2022, and are not subject to redemption prior to maturity.