For the first time ever, Standard & Poor credit rating agency has downgraded Tennessee Valley Authority’s bond rating from AAA to AA+, but a TVA official said the company is still fiscally sound.
“The fundamental financial strength of TVA is unchanged,” TVA Chief Financial Officer John Thomas said in a prepared statement. “TVA receives no taxpayer dollars and its debt is not part of the national debt.”
Another top credit rating agency, Moody’s, reaffirmed TVA’s AAA rating and Fitch did not change it’s rating of the corporation, TVA officials said.
According to S&P, as of March 31, TVA had $26.2 billion of debt and other financing obligations outstanding, such as statutory debt and energy prepayment obligations.
Additionally, officials have recorded an estimated charge of $1.1 billion for the clean up and related costs of the 2008 Kingston coal ash spill.
The rating reflects the “extremely high likelihood that this corporation, which is wholly owned by the U.S. government, would receive extraordinary federal support in the event of financial distress,” according to a news release from S&P.
"The negative outlook reflects the outlook of the United States as TVA's sponsoring sovereign," Standard & Poor's credit analyst Theodore Chapman said in a prepared statement. "While we note that the stand-alone credit profile of TVA is not without challenges, both financial and operational, we do not currently believe these challenges measurably pressure the stand-alone credit profile during our horizon of the next two years."
Despite the move from S&P, Moody’s has confirmed TVA’s AAA rating and gave the company a stable outlook.
“TVA is a self-funded, self-sufficient public power system that finances all of its operations from revenues generated by the sale of electricity and from power system financings,” according to a news release from Moody’s. “Although TVA is a wholly owned U.S. government corporation and would likely enjoy strong U.S. government support if such support was ever needed, TVA has not required nor received any appropriations from the federal government since 1999.”
