TVA Launches Inaugural Green Bond Offering, Sets Interest Rate Record

KNOXVILLE, Tenn., Sept. 13, 2021 /PRNewswire/ -- The Tennessee Valley Authority announced and priced a $500 million offering of 10-year maturity green bonds today, its first offering of a sustainability-focused financial instrument.

Based on TVA's recently released Sustainable Financing Framework, the bonds will fund ongoing capital investments that build on TVA's industry-leading Enviroment, Social and Governance successes and support meeting the goals of TVA's Strategic Intent and Guiding Principles endorsed by the Board of Directors in May 2021.

A key intent of that document is to aggressively move TVA toward a sustainable, net-zero carbon energy future by 2050 while maintaining low costs and reliability.

"TVA's financial position has strengthened over the past decade, and we are continuing our disciplined financial approach as we invest in the energy system of the future," said John Thomas, TVA Chief Financial & Strategy Officer. "Low cost financing for our strategic capital investments will contribute to keeping energy rates as low as feasible even as we make progress toward our net-zero carbon aspirational goal."

The bonds carry a coupon interest rate of 1.500%, which sets a record for the lowest rate ever achieved by TVA on a 10-year financing. TVA's previous record on a 10-year maturity was set in 2012, with a rate of 1.875%. The record low rate on the bonds will save TVA over $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 significant capital investments for increased renewable energy generation, energy storage, transmission system upgrades and development of advanced clean energy technologies. A potential TVA solar project in northern Alabama and a potential TVA energy storage project in eastern Tennessee ? both still undergoing detailed environmental reviews ? are two possible uses of the funding. As part of the green bond format, TVA expects to report on the allocations of net proceeds of the bonds annually until proceeds are fully allocated. 

"TVA's first green bond is a milestone for our financing program," said Tammy Wilson, TVA Treasurer and Chief Risk Officer. "Today's record-setting transaction demonstrates that the financial community is focused on investments in cleaner energy, and supportive of TVA's sustainability goals."

TVA's green bond offering drew over $2 billion in initial orders from a variety of investors, including 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 for the transaction.

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 can be identified by the CUSIP number 880591EX6 (ISIN number US880591EX64).

The terms of the bonds are consistent with TVA's Sustainable Financing Framework, which outlines the categories of strategic capital projects where the proceeds may be allocated, including renewables, energy storage, energy efficiency, transmission investments that support TVA's clean energy goals, and research and development expenditures related to other categories identified in the framework.

TVA obtained a second-party opinion on its framework from global analytical firm Sustainalytics, which concluded that TVA's Sustainable Financing Framework is credible, impactful and aligned with relevant sustainability and green bond standards and principles. The Sustainalytics opinion and other details can be accessed from the ESG Information for Investors section of TVA's Investor Relations website at www.tva.com/investors or directly by clicking here.

The Tennessee Valley Authority is 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. TVA receives no taxpayer funding, deriving virtually all of its revenues from sales of electricity. In addition to operating and investing its revenues in its electric system, TVA provides flood control, navigation and land management for the Tennessee River system, and assists local power companies and state and local governments with economic development and job creation.

SOURCE Tennessee Valley Authority