published Monday, April 25th, 2011

S&P issues negative warning on ratings of TVA debt

  • photo
    TVA Offices in Chattanooga, Tennessee
    Staff Photo by Dan Henry/Chattanooga Times Free Press

The credit rating agency Standard and Poor’s downgraded its outlook to negative on TVA debt today, a week after S&P made a similar warning on U.S. government debt overall.

S&P Credit Analyst Theodore Chapman reaffirmed the top AAA long-term rating for the Tennessee Valley Authority on bonds it issues to finance its power projects. But Chapman said as a wholly owned corporation of the federal government, the negative warning for federal debt may mean that the government is less likely to stand behind TVA debt issues.

"The change reflects our revision of the outlook on the United States of America to negative from stable," Chapman said in a statement released late today.

S&P issued the negative warning on U.S. debt last week due to the rising federal deficit and the likelihood that the federal government will reach its authorized borrowing authority within the next couple of months. Congress is now debating whether to raise the federal borrowing cap.

S&P said TVA’s stand-alone credit profile is 'AA-' and “our view that there is an extremely high likelihood that the U.S. government would provide extraordinary support to TVA in the event of financial distress,” Chapman said.

The negative warning is the first for TVA since S&P gave a similar downgrade caution from 1989 to 1991 related to TVA’s own financial condition.

“The change in outlook on TVA, as a wholly-owned government corporation, is entirely related to the change in outlook for the U.S. government,” TVA spokesman Scott Brooks said. “It does not reflect a change in TVA’s financial strength or any TVA event.”

TVA is completely self-funded and does not rely on financial support from the government, although the federal utility enjoys the implicit backing of the U.S. government.

Brooks said the revised outlook “ is not expected to have a material impact on TVA.”

Details in tomorrow’s Times Free Press

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rolando said...

I have some power tools I want to sell...after the above post -- and all the others just like it the TFP allows -- this rag should have no objections to my selling them here without paying for an ad, ya think?

The TFP is establishing a poor precedent by refusing to enforce its own Terms of Usage [or whatever]. What they allow one to post, they must allow others to post...isn't a refusal of that grounds for a lawsuit?

April 25, 2011 at 8:57 p.m.
moon4kat said...

I don't think the TFP invites the spam ads. But, catching, removing and preventing them should be a high priority.

April 26, 2011 at 8:56 a.m.
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