Company: TVC
Filing Date: 2025-07-29
Form Type: 10-Q
Source: 0001376986-25-000044
Chunk: 180

Company: Tennessee Valley Authority
Filing Date: 2025-07-29
Form: 10-Q
Item: Part I, Item 1
Chunk 180
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 in derivative instruments which may include swaps, futures, options, forwards, and other instruments.  At June 30, 2025, and September 30, 2024, the NDT held investments in forward contracts to purchase debt securities.  The fair values of these derivatives were in net asset positions totaling $18 million and $11 million at June 30, 2025, and September 30, 2024, respectively. Collateral.  TVA's interest rate swaps, currency swaps, and commodity derivatives under the FHP contain contract provisions that require a party to post collateral (in a form such as cash or a letter of credit) when the party's liability balance under the agreement exceeds a certain threshold.  At June 30, 2025, the aggregate fair value of all derivative instruments with credit-risk related contingent features that were in a liability position was $794 million.  TVA's collateral obligations at June 30, 2025, under these arrangements were $439 million, for which TVA had posted $411 million in letters of credit.  These letters of credit reduce the available balance under the related credit facilities.  TVA's assessment of the risk of its nonperformance includes a reduction in its exposure under the interest rate swap contracts as a result of this posted collateral.  For all of its derivative instruments with credit-risk related contingent features:    •If TVA remains a majority-owned U.S. government entity but S&P Global Ratings ("S&P") or Moody's Investors Service, Inc. ("Moody's") downgrades TVA's credit rating to AA or Aa2, respectively, TVA's collateral obligations would likely increase by $22 million, and•If TVA ceases to be majority-owned by the U.S. government, TVA's credit rating would likely be downgraded and TVA would be required to post additional collateral.Counterparty Risk TVA may be exposed to certain risks when a counterparty has the potential to fail to meet its obligations in accordance with agreed terms.  These risks may be related to credit, operational, or nonperformance matters.  To mitigate certain counterparty risk, TVA analyzes the counterparty's financial condition prior to entering into an agreement, establishes credit limits, monitors the appropriateness of those limits, as well as any changes in the creditworthiness of the counterparty, on an ongoing basis, and when required, employs credit mitigation measures, such as collateral or prepayment arrangements and