TVA Powers Up Individual Bond Offering

The Tennessee Valley Authority, largest American wholesale producer of electricity, says it will sell bonds twice a month to individuals.

The move mirrors similar actions taken by Bank of America and Household Finance in targeting bond sales at individuals.

“Electronotes”

The first issue of “electronotes,” launched on Monday, will carry a 6.5% coupon, pay interest semiannually and mature in 2021. TVA will be able to call the bonds away from investors starting in 2005. Subsequent issues will carry maturities of one to 30 years, have callable and non-callable structures and will have interest payable monthly, quarterly, semiannually or annually, according to TVA.

The company will use proceeds to retire existing debt or finance its power program.

The bonds are available in $1,000 denominations and include a “survivor’s option,” which allows a survivor to redeem the bonds at face value if the bondholder dies.

Credit rating agency Moody’s Investors Service rates TVA’s power debt “Aaa,’ while Standard & Poor’s rates it “AAA.” That?s the highest investment grades from both firms.