HASI Prices Private Offering of $700 Million of 6.375% Green Senior Unsecured Notes due 2034

Rhea-AI Summary

Hannon Armstrong Sustainable Infrastructure Capital (HASI) has announced the pricing of a $700 million private offering of 6.375% green senior unsecured notes due 2034. The notes, guaranteed by several affiliated entities, are set to settle on July 1, 2024, pending customary closing conditions. Net proceeds of approximately $688 million will be used to repay parts of the company's unsecured credit facility and buy back some of its 6.00% senior notes due 2025. Remaining funds will be invested in or refinance eligible green projects. The notes are being offered to qualified institutional buyers under Rule 144A and non-U.S. persons under Regulation S.

Positive

• Successfully priced $700 million offering of 6.375% green senior unsecured notes due 2034.
• Expected net proceeds of approximately $688 million.
• Funds will be used to repay parts of unsecured credit facility and repurchase 6.00% senior notes due 2025.
• Commitment to investing in or refinancing eligible green projects.

Negative

• High-interest rate of 6.375% on the new notes compared to the industry average.
• Potential risk if closing conditions are not met by July 1, 2024.
• Notes not registered under the Securities Act, limiting potential investors to qualified institutional buyers and non-U.S. persons.

Insights

Financial Analyst

Hannon Armstrong's issuance of $700 million in green senior unsecured notes with a 6.375% interest rate due 2034 is quite significant. The goal of using the proceeds to pay down a portion of their unsecured credit facility and repurchase some of their 6.00% Senior Notes due 2025 indicates a strategic approach to managing their debt profile. This refinancing effort aims to take advantage of current market conditions, locking in lower long-term interest rates while retiring higher-cost existing debt.

For retail investors, this move suggests that HASI is focusing on strengthening its balance sheet and enhancing its financial flexibility. However, the interest rate on these green notes is relatively high, hinting that investors see a degree of risk. The net proceeds of $688 million will be directed towards eligible green projects, aligning with the company’s sustainability mission. Investors should note that allocating funds to 'green' projects can make the company attractive to ESG-focused funds, potentially supporting the stock price over the long term.

In the short term, the issuance increases the company's total debt, which could pressure liquidity if these green projects don't yield expected returns. However, the overall strategy is sound and aligns with their environmental mission, offering a balanced long-term perspective.

Market Research Analyst

The issuance of green notes by Hannon Armstrong fits within a broader trend of increasing green bond offerings aimed at sustainability-focused investments. Green bonds have attracted considerable interest due to their environmental benefits and appeal to ESG investors. This strategy can broaden HASI’s investor base, increasing demand for its shares and possibly enhancing stock liquidity.

For market context, green bonds have been a growing segment of the bond market. They offer a way for companies to fund environmentally-friendly projects, which can enhance a company's public image and align it with global sustainability goals. The registration rights associated with these notes provide additional security for institutional investors, further boosting their appeal.

Retail investors should consider the broader implications of green bonds in their investment strategy. While the higher interest rate indicates perceived risk, the commitment to sustainability projects could drive long-term value, particularly as regulatory and market focus on green initiatives increases.

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 that it has priced its private offering of $700 million in aggregate principal amount of 6.375% green senior unsecured notes due 2034 (the “Notes”). At issuance, the Notes will be guaranteed by Hannon Armstrong Sustainable Infrastructure, L.P., Hannon Armstrong Capital, LLC, HAT Holdings I LLC, HAT Holdings II LLC, HAC Holdings I LLC and HAC Holdings II LLC. The settlement of the Notes is expected to occur on July 1, 2024, subject to customary closing conditions. The Notes will have certain registration rights.

The Company estimates that the net proceeds from the offering of the Notes will be approximately $688 million, after deducting the initial purchasers’ discounts and estimated offering expenses. The Company intends to utilize the net proceeds from the offering of the Notes to temporarily repay a portion of the outstanding borrowings under its unsecured credit facility and to repurchase for cash certain of its 6.00% Senior Notes due 2025 (the “2025 Notes”) as described below. The Company will use cash equal to the net proceeds from the 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 two years following the issue date. Prior to the full investment of such net proceeds, the Company intends to invest an amount equal to such net proceeds in interest-bearing accounts and short-term, interest-bearing securities and/or such net proceeds may be temporarily used to repay certain indebtedness.

The Notes and the related guarantees are being 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 have not been 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. This press release shall not constitute a notice of redemption for the 2025 Notes.

About HASI

HASI (NYSE: HASI) is a leading climate positive investment firm that actively partners with clients to deploy real assets that facilitate the energy transition. With more than $12 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, 2023, 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/20240625066722/en/

Investors:

Aaron Chew

investors@hasi.com

240-343-7526



Media:

Conor Fryer

media@hasi.com

443-321-5754

Source: Hannon Armstrong Sustainable Infrastructure Capital, Inc.

FAQ

What is the amount and interest rate of HASI's new notes offering?

HASI has announced a $700 million private offering of 6.375% green senior unsecured notes due 2034.

When is the settlement date for HASI's new notes?

The settlement of HASI's new notes is expected to occur on July 1, 2024, subject to customary closing conditions.

What will HASI do with the net proceeds from the notes offering?

HASI will use the approximately $688 million net proceeds to repay part of its unsecured credit facility, repurchase 6.00% senior notes due 2025, and invest in eligible green projects.

Are HASI's new notes registered under the Securities Act?

No, HASI's new notes are not registered under the Securities Act and are offered only to qualified institutional buyers and non-U.S. persons.

What are HASI's plans for the funds before fully investing in green projects?

Pending full investment, HASI plans to invest the proceeds in interest-bearing accounts, short-term securities, or use them temporarily to repay certain indebtedness.