8-K: Hannon Armstrong Issues $200 Million in Green Senior Unsecured Notes

Hannon Armstrong has issued an additional $200 million in green senior unsecured notes to fund sustainable infrastructure projects and for general corporate purposes.

Summary

• Hannon Armstrong Sustainable Infrastructure Capital, Inc. has issued an additional $200 million in 8.00% green senior unsecured notes due in 2027.
• These notes were issued through its subsidiaries, HAT Holdings I LLC and HAT Holdings II LLC.
• The notes were priced at 102.75% of the principal amount, plus accrued interest, resulting in a yield to maturity of 7.08% and a yield to worst of 7.02%.
• The proceeds from the offering will be used to acquire, invest in, or refinance eligible green projects, including some already identified.
• The company may also use the proceeds for general corporate purposes.
• Prior to full investment, the net proceeds will be used to temporarily repay a portion of the outstanding borrowings under the company's unsecured revolving credit facility.
• Any remaining net proceeds will be invested in interest-bearing accounts and short-term, interest-bearing securities.

Sentiment

Score: 7

Explanation: The document indicates a positive development for the company, raising capital for green projects, but the cost of capital is a consideration. The sentiment is moderately positive.

Positives

• The issuance of green notes aligns with Hannon Armstrong's focus on sustainable infrastructure.
• The company has identified additional investment opportunities consistent with its normal investment profile.
• The temporary repayment of the revolving credit facility provides financial flexibility.
• The company is able to raise capital at a yield of 7.08% which is a positive for the company.

Negatives

• The notes are subject to restrictions on transfer, limiting their liquidity.
• The company is paying 8.00% interest on the notes, which is a cost of capital.

Risks

• The company's ability to identify and invest in eligible green projects may impact the use of proceeds.
• The company is subject to interest rate risk on the notes.
• The company is subject to market risk on the short term investments.

Future Outlook

The company intends to allocate the net proceeds to acquire, invest in, or refinance eligible green projects and for general corporate purposes. They also plan to temporarily repay a portion of their revolving credit facility and invest any remaining funds in short-term securities.

Industry Context

This issuance reflects the growing trend of green bond issuances to fund sustainable infrastructure projects, aligning with increasing investor interest in ESG-focused investments. It is a common practice for companies in the renewable energy and sustainable infrastructure sector to raise capital through green bonds.

Comparison to Industry Standards

• Other companies in the renewable energy sector, such as NextEra Energy Partners and Brookfield Renewable Partners, also frequently issue green bonds to finance their projects.
• The yield on these notes is comparable to other similar green bond issuances in the market, reflecting the current interest rate environment.
• The use of proceeds for green projects is consistent with industry best practices for green bond issuances.

Stakeholder Impact

• Shareholders may view this as a positive step towards funding growth and sustainable projects.
• Creditors may see this as a sign of the company's ability to access capital markets.
• The issuance of green bonds may attract investors interested in ESG-focused investments.

Next Steps

• The company will allocate the net proceeds to acquire, invest in, or refinance eligible green projects.
• The company will temporarily repay a portion of its outstanding borrowings under its unsecured revolving credit facility.
• The company will invest any remaining net proceeds in interest-bearing accounts and short-term, interest-bearing securities.

Key Dates

Keywords

Green Bonds, Sustainable Infrastructure, Debt Financing, Senior Unsecured Notes, Private Offering, Renewable Energy, Hannon Armstrong