AES Announces Public Offering of Fixed-to-Fixed Rate Reset Junior Subordinated Green Notes
The AES (NYSE: AES) announced plans to offer fixed-to-fixed rate reset junior subordinated green notes in a registered public offering. AES aims to allocate the net proceeds to eligible green projects, with interim use for general corporate purposes.
The offering will be managed by Citigroup Global Markets, Goldman Sachs, Mizuho Securities USA, Morgan Stanley, and SMBC Nikko Securities America. The effective shelf registration statement for the notes has already been filed with the SEC.
This announcement does not constitute an offer or solicitation to sell or buy securities. For more information, refer to the prospectus and prospectus supplement dated May 16, 2024.
- AES aims to allocate net proceeds to eligible green projects, enhancing their sustainability profile.
- The involvement of major financial institutions like Citigroup, Goldman Sachs, Mizuho Securities, Morgan Stanley, and SMBC Nikko underscores the offering's credibility.
- The notes are fixed-to-fixed rate reset, potentially offering stability and predictability in returns.
- The announcement is subject to market and other conditions, indicating potential uncertainty.
- Pending allocation to green projects, proceeds will be used for general corporate purposes, which may not immediately benefit shareholders.
Insights
The offering of fixed-to-fixed rate reset junior subordinated green notes is a noteworthy financial event for AES Corporation. These junior subordinated notes typically offer a higher return due to their subordinated status, which means they are lower in the payout hierarchy in case of insolvency. However, their green nature indicates a commitment to funding environmentally sustainable projects, potentially appealing to socially responsible investors. The fixed-to-fixed rate reset structure can manage interest rate risk over time, providing periodic rate resets for better alignment with market conditions. This can help AES attract a wider range of investors who are concerned about fluctuating interest rates.
Retail investors should consider the dual nature of these notes: while they might offer attractive returns compared to senior debt, they come with increased risk due to their subordinated status. The use of proceeds for green projects could bolster AES's reputation in the renewable energy sector, potentially enhancing long-term shareholder value.
From a market perspective, the issuance of green notes aligns AES with a broader trend towards sustainable finance. Green bonds and notes have grown in popularity as companies strive to meet environmental, social and governance (ESG) criteria. This move may improve AES's standing among ESG-focused funds and investors, increasing demand for their securities. The involvement of major financial institutions like Citigroup, Goldman Sachs and Morgan Stanley suggests confidence in the success of this offering, which might positively influence investor perception.
Investors should observe how the market responds to this issuance in terms of demand and pricing. A strong uptake can signal robust investor confidence in AES's financial health and sustainability initiatives, while tepid demand might indicate investor caution.
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
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,
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. 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, which are subject to risks and uncertainties, such as our ability to market and sell the Notes, our continued eligibility to use the shelf registration statement, general economic conditions and other risks and uncertainties. Forward-looking statements are not intended to be a guarantee of future results, but instead constitute AES' current expectations based on reasonable assumptions.
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
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