HASI Announces Add-On Private Offering of $100 Million Green Senior Unsecured Notes

Rhea-AI Summary

Hannon Armstrong Sustainable Infrastructure Capital, Inc. (HASI) announces a private offering of $100 million in aggregate principal amount of 8.00% green senior unsecured notes due 2027 by its indirect subsidiaries. The primary rationale for the issuance is to fund identified near term opportunities in climate solutions at a mid-teen Return on Equity. The Company intends to allocate the net proceeds to acquire, invest in or refinance new and/or existing eligible green projects and for general corporate purposes.

Insights

Financial Analyst

The announcement by Hannon Armstrong Sustainable Infrastructure Capital, Inc. (HASI) to issue $100 million in green senior unsecured notes due 2027 is a strategic financial move that warrants scrutiny. The notes carry an 8.00% interest rate, which is considerably high in the current market environment, indicating a potentially increased cost of capital for HASI. The decision to issue additional notes as part of the same class as existing ones suggests a leveraged approach to finance its investment pipeline.

From a financial perspective, the anticipated yield of approximately 11% and the expected mid-teen Return on Equity (ROE) are attractive, but they also imply that the underlying investments carry a commensurate level of risk. Investors should consider the balance between the cost of debt and the returns on the green projects funded by this issuance. Furthermore, HASI's intention to temporarily repay outstanding borrowings under its unsecured revolving credit facility with the net proceeds signals a strategic management of its debt profile, which could improve financial flexibility.

However, the private nature of the offering, limited to qualified institutional buyers and non-U.S. persons, suggests that retail investors will not have direct access to these securities. This could affect liquidity and marketability of the notes, potentially impacting their secondary market performance.

Sustainable Investment Analyst

The issuance of green senior unsecured notes by HASI underscores the company's ongoing commitment to financing climate solutions. The proceeds are earmarked for eligible green projects, which may encompass a range of initiatives from renewable energy to sustainable transport, reflecting the broad spectrum of HASI's investment focus. The company's approach aligns with the growing trend of sustainable investing, where capital allocation is increasingly influenced by environmental impact.

Given the stipulation that the net proceeds will be allocated to projects that qualify as 'Eligible Green Projects', the offering is positioned to attract investors with a mandate for sustainability. The investment opportunities identified by HASI are said to be consistent with its normal investment profile, which suggests a continuity in the company's strategic investment approach. However, the success of these investments hinges on the execution of these projects and their alignment with the evolving regulatory landscape and market demand for green infrastructure.

It is also noteworthy that HASI plans to invest in projects with disbursements made within the twelve months preceding the issue date, which could indicate a retroactive funding strategy that may help in achieving immediate environmental impact and financial returns.

Market Research Analyst

The green bond market, in which HASI's green senior unsecured notes are categorized, has been experiencing significant growth, driven by investor demand for environmentally responsible investment options. The 8.00% interest rate of HASI's offering is competitive and may reflect the increasing appetite for such investments, despite the higher yields potentially indicating higher risk or a premium for liquidity.

Analyzing the market reaction to similar offerings can provide insights into the potential performance of HASI's notes. The company's focus on Behind-the-Meter, Grid-Connected and Fuels, Transport and Nature markets places it within several high-growth sectors that are critical to the transition to a low-carbon economy. The success of the notes could serve as a barometer for the market's valuation of such investments and the overall sentiment towards green finance.

Additionally, the choice to use a portion of the net proceeds to temporarily repay a portion of the outstanding borrowings under the company’s unsecured revolving credit facility could be seen as a prudent liquidity management strategy, which may be well-received by market analysts and investors looking for signs of strong corporate governance.

ANNAPOLIS, Md.--(BUSINESS WIRE)-- Hannon Armstrong Sustainable Infrastructure Capital, Inc. (“HASI,” “our,” or the “Company”) (NYSE: HASI), a leading investor in climate solutions, today announced, subject to market conditions, a private offering of $100 million in aggregate principal amount of 8.00% green senior unsecured notes due 2027 (the “Notes”) by its indirect subsidiaries, HAT Holdings I LLC (“HAT I”) and HAT Holdings II LLC (“HAT II,” and together with HAT I, the “Issuers”). The Notes will be additional notes and form part of the same class as the Company’s existing 8.00% green senior unsecured notes due 2027. At issuance, the Notes will be guaranteed by the Company, Hannon Armstrong Sustainable Infrastructure, L.P. and Hannon Armstrong Capital, LLC. The primary rationale for the issuance is to fund seven identified near term opportunities in the pipeline across Behind-the-Meter, Grid-Connected and Fuels, Transport, and Nature markets and at weighted average anticipated yield of approximately 11%, resulting in mid-teen Return on Equity.

The Company intends to allocate an amount equal to the net proceeds of the offering to acquire, invest in or refinance, in whole or in part, new and/or existing eligible green projects and for general corporate purposes, but in all cases the Company will use cash equal to the net proceeds from this offering to acquire, invest in or refinance, in whole or in part, new and/or existing Eligible Green Projects. These eligible green projects may include projects with disbursements made during the twelve months preceding the issue date of the Notes and those with disbursements to be made following the issue date. Additional investment opportunities have also already been identified and are consistent with the Company’s normal course investment profile. Prior to the full investment of such net proceeds, the Company intends to apply the net proceeds to temporarily repay a portion of the outstanding borrowings under the Company’s unsecured revolving credit facility and, for any net proceeds from this offering not used to temporarily repay the unsecured credit facility, to invest such net proceeds in interest-bearing accounts and short-term, interest-bearing securities.

The Notes and the related guarantees will be offered only to persons reasonably believed to be qualified institutional buyers in reliance on Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), and non-U.S. persons outside the United States pursuant to Regulation S under the Securities Act. The Notes and the related guarantees will not be registered under the Securities Act or any state securities laws and may not be offered or sold in the United States absent an effective registration statement or an applicable exemption from the registration requirements of the Securities Act or any state securities laws.

This press release shall not constitute an offer to sell, or the solicitation of an offer to buy, these securities, nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.

About HASI

HASI (NYSE: HASI) is a leading climate positive public company that actively partners with clients to deploy real assets that facilitate the energy transition. With more than $11 billion in managed assets, our vision is that every investment improves our climate future.

Forward-Looking Statements

Some of the information in this press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. When used in this press release, words such as “believe,” “expect,” “anticipate,” “estimate,” “plan,” “continue,” “intend,” “should,” “may,” “target,” or similar expressions are intended to identify such forward-looking statements. Forward-looking statements are subject to significant risks and uncertainties. Investors are cautioned against placing undue reliance on such statements. Actual results may differ materially from those set forth in the forward-looking statements. Factors that could cause actual results to differ materially from those described in the forward-looking statements include those discussed under the caption “Risk Factors” included in the Company’s Annual Report on Form 10-K (as supplemented by our Form 10-K/A) for the Company’s fiscal year ended December 31, 2022, which were filed with the U.S. Securities and Exchange Commission (“SEC”), as well as in other reports that the Company files with the SEC.

Forward-looking statements are based on beliefs, assumptions and expectations as of the date of this press release. The Company disclaims any obligation to publicly release the results of any revisions to these forward-looking statements reflecting new estimates, events or circumstances after the date of this press release.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240109318945/en/

INVESTOR RELATIONS INQUIRIES

Neha Gaddam

410-571-6189

investors@hasi.com

Source: Hannon Armstrong Sustainable Infrastructure Capital, Inc.

FAQ

What is Hannon Armstrong Sustainable Infrastructure Capital, Inc.'s ticker symbol?

The ticker symbol for Hannon Armstrong Sustainable Infrastructure Capital, Inc. is HASI.

What is the primary rationale for the issuance of the green senior unsecured notes?

The primary rationale for the issuance is to fund identified near term opportunities in climate solutions at a mid-teen Return on Equity.

How does the Company intend to allocate the net proceeds of the offering?

The Company intends to allocate the net proceeds to acquire, invest in or refinance new and/or existing eligible green projects and for general corporate purposes.