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Tennessee Valley Authority Bonds Drop After Obama Proposes Sale

April 11 (Bloomberg) -- Bonds of the Tennessee Valley Authority dropped after President Barack Obama called for the possible sale of the largest U.S. government-owned power utility.

The TVA’s $1 billion of 3.5 percent bonds due December 2042 declined to 96.5 cents on the dollar from 98.6 cents yesterday to yield 3.69 percent, or 70.1 basis points more than similar-maturity Treasuries at 9:27 a.m. in New York, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. The spread widened from 57.5 basis points yesterday.

The president proposed a potential sale as part of a “strategic review” of TVA, which faces increasing capital costs that will impact the federal deficit, according to the Obama administration’s budget for fiscal year 2014. Selling part or all of TVA can “help put the nation on a sustainable fiscal path,” according to the text of the budget.

TVA was created in 1933 as part of U.S. President Franklin Roosevelt’s New Deal plans to lift the nation out of an economic depression. The agency now provides power to 9 million people in parts of seven southeastern states including most of Tennessee, according to TVA’s website. Its generation assets include 29 hydroelectric plants, 11 coal plants and 3 nuclear power plants.

To contact the reporter on this story: Charles Mead in New York at

To contact the editor responsible for this story: Alan Goldstein at

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