Just days after the Tennessee Valley Authority issued its largest set of bonds since 2011, it lost its last perfect credit rating because of the rising debt and deficits of its owner, the U.S. government.
TVA, which generates electricity for 10 million people and manages the Tennessee River, pays for its operation through sales of electricity. It is governed by a board and a CEO.
But as a wholly owned corporation of the U.S. government, TVA cannot raise money by selling pieces of itself to shareholders. Instead, it funds major projects with long-term debt by selling bonds. It has a debt limit of $30 billion set in 1979 by Congress.
The opinion of the three dominant rating services — Fitch Ratings, Moody’s and Standard & Poor’s — as to how trustworthy TVA is to pay back those bonds rises and falls with their opinion of the U.S. government.
(READ MORE: Fired TVA director says clean energy tax credits critical)