HASI Upsizes and Prices Add-On Private Offering of $200 Million of Green Senior Unsecured Notes at a Yield to Maturity of 7.08%

Rhea-AI Summary

Hannon Armstrong Sustainable Infrastructure Capital, Inc. (HASI) announced the upsizing and pricing of its private offering of $200 million in aggregate principal amount of 8.00% green senior unsecured notes due 2027. The offering will fund near-term opportunities in the pipeline across various markets, resulting in high-teen Return on Equity. The net proceeds are estimated to be approximately $204.4 million, to be used for new and/or existing eligible green projects and general corporate purposes.

Financial Analyst

The upsizing and pricing of Hannon Armstrong Sustainable Infrastructure Capital, Inc.'s green senior unsecured notes represent a significant capital raise for the company, aimed at funding a portfolio of green projects. The increase from $100 million to $200 million suggests strong demand or confidence in the company's financial prospects. The yield to maturity of 7.08% and yield to worst of 7.02% are competitive rates, especially considering the current interest rate environment.

Investors should note the high-teen Return on Equity (ROE) anticipated from the funded projects, which is an attractive prospect. However, it's crucial to assess the risks associated with the specific sectors of investment, such as Behind-the-Meter, Grid-Connected and Fuels, Transport and Nature markets. The allocation of net proceeds to temporarily repay outstanding borrowings under the company’s unsecured revolving credit facility indicates a strategic move to optimize the capital structure and reduce interest expenses in the short term.

Environmental Finance Expert

The issuance of green senior unsecured notes by HASI underscores the growing trend of sustainable investment vehicles in the financial market. These instruments are designed to fund projects that have a positive environmental impact, aligning with global efforts to combat climate change. The company's commitment to allocate funds to Eligible Green Projects, which may have disbursements made both before and after the issue date, reflects a forward-thinking approach to environmental stewardship.

Investors should evaluate the environmental impact of these projects as part of their due diligence. The success of such investments is not only measured in financial returns but also in their contribution to sustainability goals. The company's focus on a diversified range of green markets may mitigate sector-specific risks and offer a balanced portfolio of environmentally beneficial assets.

Market Research Analyst

The pricing of the notes at 102.75% above their aggregate principal amount indicates a premium, which can be indicative of a positive market reception and investor confidence in HASI's creditworthiness and the expected performance of the green projects it finances. The strategic decision to upsize the offering may also reflect an assessment of market liquidity and investor appetite for green bonds, which have been gaining traction as a means to finance projects that support environmental sustainability.

Market participants should consider the broader implications of such offerings on the green bond market, including potential impacts on pricing, demand and the development of standards for what constitutes an 'Eligible Green Project.' The company's actions could influence market expectations and set a precedent for future issuances in the sustainable finance space.

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 upsized and priced its private offering of $200 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 high-teen Return on Equity. The offering was upsized from the previously announced $100 million in aggregate principal amount. The Notes have been priced at 102.75%, plus accrued interest with a yield to maturity of 7.08% and yield to worst of 7.02%. The settlement of the Notes is expected to occur on January 12, 2024, subject to customary closing conditions.

The Company estimates that the net proceeds from the offering of the Notes will be approximately $204.4 million, after deducting the initial purchasers’ discounts and commissions and estimated offering expenses. 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 will be re-borrowed when investments are funded. 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 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 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.

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INVESTOR RELATIONS INQUIRIES

Neha Gaddam

410-571-6189

investors@hasi.com

Source: Hannon Armstrong Sustainable Infrastructure Capital, Inc.

What is the latest announcement from Hannon Armstrong Sustainable Infrastructure Capital, Inc. (HASI)?

Hannon Armstrong Sustainable Infrastructure Capital, Inc. (HASI) announced the upsizing and pricing of its private offering of $200 million in aggregate principal amount of 8.00% green senior unsecured notes due 2027.

How will the net proceeds from the offering be used by Hannon Armstrong Sustainable Infrastructure Capital, Inc. (HASI)?

The net proceeds from the offering are estimated to be approximately $204.4 million, to be used for new and/or existing eligible green projects and general corporate purposes.

What is the primary rationale for the issuance of the Notes by Hannon Armstrong Sustainable Infrastructure Capital, Inc. (HASI)?

The primary rationale for the issuance is to fund seven identified near-term opportunities in the pipeline across various markets, resulting in high-teen Return on Equity.

When is the settlement of the Notes expected to occur for Hannon Armstrong Sustainable Infrastructure Capital, Inc. (HASI)?

The settlement of the Notes is expected to occur on January 12, 2024, subject to customary closing conditions.

Who are the indirect subsidiaries issuing the Notes for Hannon Armstrong Sustainable Infrastructure Capital, Inc. (HASI)?

The Notes are being issued by HAT Holdings I LLC (“HAT I”) and HAT Holdings II LLC (“HAT II,” and together with HAT I, the “Issuers”).