AES Announces Pricing of $800 Million of Senior Notes in Public Offering

Rhea-AI Summary

AES (NYSE: AES) has announced the pricing of $800 million aggregate principal amount of 5.800% senior notes due 2032. The offering is expected to close on March 20, 2025, subject to customary conditions.

The company plans to use the net proceeds to fund purchases of its 3.300% Senior Notes due 2025 through a tender offer. Any remaining proceeds will be allocated to retire outstanding indebtedness and for general corporate purposes.

The offering is being managed by joint book-runners including Citigroup Global Markets, BNP Paribas Securities, BofA Securities, MUFG Securities Americas, and Santander US Capital Markets.

Positive

• Refinancing of existing debt with new 7-year notes indicates strong market access
• Multiple major financial institutions supporting the offering demonstrates market confidence

Negative

• New notes carry higher interest rate (5.800%) compared to existing notes (3.300%), increasing interest expenses
• Additional $800 million in debt could impact company's leverage ratios

Insights

Financial Analyst

AES has priced $800 million in senior notes with a 5.800% interest rate maturing in 2032, representing a significant debt refinancing move. The company plans to use these proceeds primarily to purchase its existing 3.300% notes due in 2025, with remaining funds allocated to retiring other debt and general corporate purposes.

This transaction strategically extends AES's debt maturity profile by seven years, which strengthens the company's liquidity position and reduces near-term refinancing risk. However, this comes at a cost - the 2.5% higher interest rate translates to approximately $20 million in additional annual interest expenses, assuming full replacement of equivalent debt.

The offering size is substantial relative to AES's $8.2 billion market capitalization, representing nearly 10% of the company's equity value. This indicates a significant financial decision that management likely considered carefully in the current interest rate environment.

From a balance sheet perspective, this transaction should remain leverage-neutral if used entirely for refinancing as indicated. While the higher interest burden will marginally impact profitability and interest coverage ratios, the extended maturity profile provides valuable financial flexibility - particularly important given AES's capital-intensive utility operations.

This proactive liability management demonstrates prudent financial stewardship, addressing potential refinancing challenges well ahead of maturity dates. The company appears to be prioritizing financial stability and liquidity management rather than funding new growth initiatives through this particular offering.

ARLINGTON, Va., March 12, 2025 /PRNewswire/ -- The AES Corporation (NYSE: AES) ("AES" or the "Company") announced today the pricing of $800 million aggregate principal amount of its 5.800% senior notes due 2032 (the "Notes"). The closing of the offering of the Notes is expected to occur, subject to certain customary closing conditions, on March 20, 2025 (T+6).

AES intends to use the net proceeds from the proposed offering to fund purchases of its 3.300% Senior Notes due 2025 (the "2025 Notes") in the tender offer to purchase for cash any and all of the 2025 Notes (the "Tender Offer") and to pay certain related fees and expenses. The Company intends to use any remaining net proceeds from the proposed offering after completion of the Tender Offer to retire certain of its outstanding indebtedness and for general corporate purposes.

Citigroup Global Markets Inc., BNP Paribas Securities Corp., BofA Securities, Inc., MUFG Securities Americas Inc. and Santander US Capital Markets LLC are acting as joint book-running managers of the proposed offering.

This press release does not constitute an offer to sell or a solicitation of an offer to buy any securities, nor does it constitute an offer, solicitation or sale in any jurisdiction in which such offer, solicitation or sale is unlawful. An effective shelf registration statement related to the Notes has previously been filed by AES with the Securities and Exchange Commission (the "SEC"). The offering and sale of the Notes are being made only by means of a prospectus supplement dated March 12, 2025 and an accompanying base prospectus dated March 11, 2025 related to the offering. Before you invest, you should read the prospectus and the preliminary prospectus supplement in that registration statement and other documents AES has filed with the SEC for more complete information about AES and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, copies of the prospectus supplement and related base prospectus related to this offering may be obtained from Citigroup Global Markets Inc., c/o Broadridge Financial Solutions, 1155 Long Island Avenue, Edgewood, NY 11717 or by telephone at 1-800-831-9146; BNP Paribas Securities Corp., 787 7th Avenue, New York, New York 10019, Attn: Syndicate Desk, or by calling toll-free at 1-800-854-5674; BofA Securities, Inc., 201 North Tryon Street, NC1-022-02-25, Charlotte, NC 28255-0001, Attn: Prospectus Department, at 1-800-294-1322 (toll-free) or emailing dg.prospectus_requests@bofa.com; MUFG Securities Americas Inc., at 1221 Avenue of the Americas, 6th Floor, New York, NY 10020-1001, Attn: Capital Markets Group, or by telephone at 1-877-649-6848; or from Santander US Capital Markets LLC, at 437 Madison Avenue New York, NY 10022, or emailing DCMAmericas@santander.us, Attn: Debt Capital Markets, or by telephone at 1-855-403-3636.

About AES 

The AES Corporation (NYSE: AES) is a Fortune 500 global energy company accelerating the future of energy. Together with our many stakeholders, we're improving lives by delivering the greener, smarter energy solutions the world needs. Our diverse workforce is committed to continuous innovation and operational excellence, while partnering with our customers on their strategic energy transitions and continuing to meet their energy needs today.

Safe Harbor Disclosure

This news release contains forward-looking statements within the meaning of the Securities Act of 1933 and of the Securities Exchange Act of 1934. Forward-looking statements are not intended to be a guarantee of future results, but instead constitute AES' current expectations based on reasonable assumptions. Such forward-looking statements include, but are not limited to, our financing plans, including the offering of the Notes and the details thereof, the proposed use of proceeds therefrom, the Tender Offer and other expected effects of the offering of the Notes and anticipated use of our shelf registration statement, which are subject to risks and uncertainties, such as our continued eligibility to use the shelf registration statement, general economic conditions and other risks and uncertainties.

Actual results could differ materially from those projected in AES' forward-looking statements due to risks, uncertainties and other factors. Important factors that could affect actual results are discussed in the prospectus supplement related to the offering and AES' filings with the SEC, including, but not limited to, the risks discussed under Item 1A: "Risk Factors" and Item 7: "Management's Discussion & Analysis" in AES' 2024 Annual Report on Form 10-K and in any subsequent reports filed with the SEC. Potential investors are encouraged to read AES' filings to learn more about the risk factors associated with AES' business. AES undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except where required by law.

Investor Contact: Susan Harcourt, 703-682-1204, susan.harcourt@aes.com
Media Contact: Amy Ackerman, 703-682-6399, amy.ackerman@aes.com

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SOURCE The AES Corporation

FAQ

What is the interest rate and maturity of AES's new senior notes offering?

AES's new senior notes offering carries a 5.800% interest rate and matures in 2032.

How much is AES raising in their March 2025 senior notes offering?

AES is raising $800 million through this senior notes offering.

What will AES use the proceeds from the 2025 senior notes offering for?

The proceeds will primarily fund the purchase of AES's 3.300% Senior Notes due 2025, with remaining funds used to retire outstanding debt and for general corporate purposes.

When is the closing date for AES's $800 million senior notes offering?

The offering is expected to close on March 20, 2025 (T+6).

Which investment banks are managing AES's 2025 senior notes offering?

The joint book-runners are Citigroup Global Markets, BNP Paribas Securities, BofA Securities, MUFG Securities Americas, and Santander US Capital Markets.