Tennessee Valley Authority announces $500M green bond offering

The Tennessee Valley Authority (TVA) launched a $500 million offering of 10-year maturity green bonds this week, the company’s first offering of a sustainability-focused financial instrument.

The bonds will fund ongoing capital investments that build on TVA’s environmental, social and governance (ESG) initiatives and are aligned with its Strategic Intent and Guiding Principles. The goal is to move TVA toward a sustainable, net-zero carbon energy future by 2050.

“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,” John Thomas, TVA chief financial and strategy officer, said. “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 1.50 percent, which is the lowest rate ever achieved by TVA on a 10-year financing.  The record low rate 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. Potential solar projects in northern Alabama and eastern Tennessee are two other possible uses of the funding, pending approvals.

TVA’s green bond offering drew more than $2 billion in initial orders from a variety of investors, including money managers, state governments, insurance companies, and others.

Tammy Wilson, TVA treasurer and chief risk officer, said, “Today’s record-setting transaction demonstrates that the financial community is focused on investments in cleaner energy, and supportive of TVA’s sustainability goals.”

The TVA 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.