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Tennessee Valley Authority downgraded by S&P

The Tennessee Valley Authority (TVA)’s bond rating has been downgraded from AAA to AA+, though, “the fundamental financial strength of the TVA is unchanged.” The TVA is a wholly-owned entity of the federal government, and the downgrade reflects, “the negative outlook of the United States as the TVA’s sponsoring sovereign.” Moody’s confirmed the TVA’s AAA rating on the basis that TVA is self-funded and a self-sufficient public power system that finances its operations based on its own user-generated revenues. In the event of fiscal stress, the TVA operates under an implicit federal guarantee.

The TVA doesn’t think the downgrade will have any material impact on its finances as the authority’s stand-alone credit rating remains unchanged (at least  in the short-term, according to S&P) and it doesn’t rely on federal subsidies.

S&P downgraded several other power authorities in the United States: Texas, Oregon, Arizona, New York and Florida, Arizona and Colorado.