AES Announces Pricing of $950,000,000 Million Fixed-to-Fixed Rate Reset Junior Subordinated Green Notes in Public Offering

Rhea-AI Summary

The AES (NYSE: AES) announced the pricing of $950 million in 7.600% fixed-to-fixed rate reset junior subordinated green notes due 2055. The closing of this offering is anticipated on May 21, 2024. AES plans to allocate the net proceeds to eligible green projects, with interim use for general corporate purposes. The offering is managed by Citigroup Global Markets, Goldman Sachs, Mizuho Securities, Morgan Stanley, and SMBC Nikko Securities.

Positive

• AES successfully priced $950 million aggregate principal amount of green notes.
• The notes carry a 7.600% interest rate, potentially appealing to investors seeking higher yields.
• Funds will be allocated to eligible green projects, aligning with sustainable investment trends.
• AES received the joint backing of major financial institutions like Citigroup, Goldman Sachs, Mizuho Securities, Morgan Stanley, and SMBC Nikko Securities.

Negative

• The high-interest rate of 7.600% implies increased future interest obligations for AES.
• Proceeds from the notes will initially be used for general corporate purposes, which may not immediately benefit shareholders.

Financial Analyst

The announcement of pricing $950 million in fixed-to-fixed rate reset junior subordinated green notes with a 7.600% interest rate provides a few important insights for retail investors. Firstly, the relatively high interest rate of 7.600% reflects the current macroeconomic environment, where rising interest rates are prevalent. This rate indicates the level of risk perceived by the market for AES's debt and aligns with higher borrowing costs across the sector.

Secondly, the issuance of green notes is noteworthy. These instruments are typically used to finance projects with environmental benefits. AES's commitment to allocate the proceeds to eligible green projects suggests a strategic move towards sustainability, which can positively impact the company's brand and appeal to ESG (Environmental, Social and Governance) focused investors. However, it is essential for investors to critically assess the specifics of these projects and AES's track record in executing similar initiatives.

Moreover, the long maturity date of 2055 allows AES to secure long-term financing. For retail investors, this might imply stability and a long-term vision from the company, but it also involves considerable interest obligations over an extended period, which could impact AES's profitability in challenging economic times.

ESG Analyst

The issuance of green notes by AES showcases the company's dedication to sustainability. Green notes are a subset of bonds specifically earmarked for financing projects with positive environmental impacts, such as renewable energy developments or energy efficiency improvements. This aligns with the increasing investor interest in ESG (Environmental, Social and Governance) investments, which prioritize ethical and sustainable business practices.

For AES, this move can enhance its reputation among ESG-conscious investors. It also signals to the market that AES is serious about integrating sustainability into its business model. However, investors should be cautious and consider reviewing the specific green projects set to benefit from these funds. Transparency in how the proceeds are used will be key to maintaining investor trust and meeting the stated environmental goals.

Additionally, the long-term nature of these notes could mean consistent funding for green initiatives, potentially leading to significant environmental benefits over the coming decades. Retail investors should weigh this against the company's ability to maintain profitability and manage debt over such an extended period.

ARLINGTON, Va., May 16, 2024 /PRNewswire/ -- The AES Corporation (NYSE: AES) ("AES" or the "Company") announced today the pricing of $950,000,000 million aggregate principal amount of its 7.600% fixed-to-fixed rate reset junior subordinated green notes due 2055 (the "Notes"). The closing of the offering of the Notes is expected to occur, subject to certain customary closing conditions, on May 21, 2024 (T+3).

AES intends to allocate an amount equal to the net proceeds from this offering to one or more eligible green projects, which may include the development or redevelopment of such projects. Pending such allocation, AES intends to use the net proceeds from the proposed offering for general corporate purposes.

Citigroup Global Markets Inc., Goldman Sachs & Co. LLC, Mizuho Securities USA LLC, Morgan Stanley & Co. LLC and SMBC Nikko Securities America, Inc. 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 May 16, 2024 and an accompanying base prospectus dated March 2, 2022 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, by email at prospectus@citi.com or by calling 800-831-9146; from Goldman Sachs & Co. LLC, Attention: Prospectus Department, 200 West Street, New York, NY 10282, telephone 1-866-471-2526, facsimile: 212-902-9316 or by emailing prospectus-ny@ny.email.gs.com; from Mizuho Securities USA LLC, 1271 Avenue of the Americas, New York, NY 10020, Attention: Debt Capital Markets Syndicate or by phone at 866-271-7403; from Morgan Stanley & Co. LLC, Attention: Prospectus Department, 180 Varick Street, 2^nd Floor, New York, NY 10014 or by phone at 1-866-718-1649; or from SMBC Nikko Securities America, Inc., Attention: Debt Capital Markets, 277 Park Avenue, New York, NY or by calling 888-868-6856.

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 ultimate allocation of amounts relating to the offering of the Notes to eligible green projects 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' 2023 Annual Report on Form 10-K and in 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
Media Contact: Amy Ackerman 703-682-6399

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SOURCE The AES Corporation

FAQ

What are the details of AES's new green notes offering?

AES priced $950 million in 7.600% fixed-to-fixed rate reset junior subordinated green notes due 2055.

When is the closing date for AES's new green notes offering?

The closing is expected to occur on May 21, 2024.

What will AES use the proceeds from the new notes offering for?

AES intends to allocate net proceeds to eligible green projects, using them for general corporate purposes in the interim.

Which institutions are managing AES's notes offering?

The offering is managed by Citigroup Global Markets, Goldman Sachs, Mizuho Securities, Morgan Stanley, and SMBC Nikko Securities.