Tennessee Valley Authority:

Bond Ratings Based on Ties to the Federal Government and Other Nonfinancial Factors

GAO-01-540: Published: Apr 30, 2001. Publicly Released: May 3, 2001.

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Linda M. Calbom
(202) 512-8341


Office of Public Affairs
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Although the criteria used to rate the bonds of the Tennessee Valley Authority (TVA) and other electric utilities are the same, they are weighted differently and, as a result, the basis for TVA's bond rating is more nonfinancial in nature than that for other electric utilities. According to bond analysts, TVA's high bond rating is largely based on the perception that its debt is federally backed because of its ties to the federal government as a wholly owned government corporation and its legislative protections from competition. If these conditions were to change, TVA's bond rating would likely be lowered, which, in turn, would affect the cost of new debt. This would add to its already high interest expense and corresponding financial challenges in a competitive market.

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