TVA Plans to Retire High-Rate Bonds Early
The Tennessee Valley Authority has announced plans to retire $750 million in high-interest bonds and save the federal utility about $30 million each year.
TVA Chief Financial Officer Bill Malec said the agency plans to pay off the 30-year bonds 22 years early using money from a bond retirement fund created in the 1980s to eventually retire a portion of TVA’s debt.
Malec said paying off the bonds early will allow TVA to remove $750 million from its total debt of $18 billion, the maintenance of which represents about 34% of TVA’s annual revenue.
Malec said the bond retirement is a financially sound move, allowing TVA to use money earning about 10% interest to pay off the bonds, on which the agency pays 13.5% to 14.9% interest. Most of TVA’s other long-term debt has an average interest rate of about 10%, he said.
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