The Tennessee Valley Authority announced and priced a $500 million offering of 10-year maturity green bonds, its first offering of what it called a sustainability-focused financial instrument.
The bonds carry a coupon interest rate of 1.500%, which is the lowest rate achieved to date by TVA on a 10-year financing. The rate is expected to save TVA more than $15 million in annual interest expense compared to bonds that matured earlier in 2021.
Proceeds from the sale will be used to fund TVA’s upcoming capital investments for increased renewable energy generation, energy storage, transmission system upgrades, and development of advanced clean energy technologies.
As part of the green bond format, TVA said it expects to report on the allocations of net proceeds of the bonds annually until proceeds are fully allocated.
Image: TVA
TVA said the offering drew more than $2 billion in initial orders from investors that included money managers, state governments, insurance companies, and others. Bank of America Securities served as Green Structuring Agent for the transaction, and joint book-running manager. Barclays, Morgan Stanley, RBC Capital Markets, and TD Securities also served as joint book-running managers.
The new bonds will mature on Sept. 15, 2031, and are not subject to redemption prior to maturity. Interest will be paid semi-annually each March 15 and Sept. 15. Application has been 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 carry the CUSIP number 880591EX6 (ISIN number US880591EX64).
TVA is structured as a corporate agency of the United States that provides electricity for business customers and local power companies serving nearly 10 million people in parts of seven southeastern states.
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