TVA headquarters in downtown Chattanooga.The Tennessee Valley Authority announced today it has priced $1billion of new 50-year global power bonds at a record low interest rate of 4.25 percent.
The bonds priced at the lowest on record for a 50-year bond by any corporate or government agency issuer.
“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.