Quarterly report pursuant to Section 13 or 15(d)

Long-term Debt (Tables)

v3.24.3
Long-term Debt (Tables)
 9 Months Ended
Sep. 30, 2024
Debt Disclosure [Abstract]  
Schedule of Outstanding Non-Recourse Asset-Backed Debt
We have outstanding the following asset-backed non-recourse debt:

  Outstanding Balance
as of		 Anticipated
Balance at
Maturity		 Carrying Value of Assets Pledged as of
  September 30, 2024 December 31, 2023 Interest
Rate		 Maturity Date September 30, 2024 December 31, 2023 Description
of Assets Pledged
(dollars in millions)
HASI Sustainable Yield Bond 2015-1A (1)
$ —  $ 68  4.28% October 2034 $ —  $ —  $ 136  Receivables, real estate, real estate intangibles, and restricted cash
HASI SYB Trust 2016-2 (2)
—  51  4.35% April 2037 —  —  57  Receivables and restricted cash
HASI Harmony Issuer 95  —  6.78% July 2043 —  261  —  Equity method investments
Other non-recourse
debt (3)
40  43 
3.15% - 7.23%
 2024 to 2032 17  41  46  Receivables
Unamortized financing costs (4) (2)
Non-recourse debt (4)
$ 131  $ 160 
(1)We prepaid this obligation in the first quarter of 2024.
(2)In the first quarter of 2024, contractual terms of this agreement were modified, which caused us to deconsolidate the entities holding such debt and its related pledged collateral.
(3)Other non-recourse debt consists of various debt agreements used to finance certain of our receivables. Scheduled debt service payment requirements are equal to or less than the cash flows received from the underlying receivables.
(4)The total collateral pledged against our non-recourse debt was $302 million and $239 million as of September 30, 2024 and December 31, 2023, respectively. These amounts include $13 million and $11 million of restricted cash pledged for debt service payments as of September 30, 2024 and December 31, 2023, respectively.
Schedule of Minimum Maturities of Debt
The stated minimum maturities of non-recourse debt as of September 30, 2024, were as follows:

Future minimum maturities
(in millions)
October 1, 2024 to December 31, 2024 $ 3 
2025 11 
2026 7 
2027 14 
2028 6 
2029 10 
Thereafter 84 
Total minimum maturities $ 135 
Unamortized financing costs (4)
Total non-recourse debt $ 131 
Amounts which were due under the term loan facility as of September 30, 2024 are as follows:
Future maturities
(in millions)
October 1, 2024 to December 31, 2024 $ 7 
2025 12 
2026 11 
2027 221 
Total 251 
Less: Unamortized Financing Costs (5)
Carrying Value $ 246 
Amounts which were due under the Secured Term Loan Facility as of September 30, 2024 are as follows:
Future maturities
(in millions)
October 1, 2024 to December 31, 2024 $ 2 
2025 10 
2026 12 
2027 11 
2028 134 
Total 169 
Less: Unamortized Financing Costs (3)
Carrying Value $ 166 
Schedule of Long-term Debt Instruments
The following are summarized terms of the Senior Unsecured Notes as of September 30, 2024:
Outstanding Principal Amount Maturity Date Stated Interest Rate Interest Payment Dates Redemption Terms Modification Date
(in millions)
2025 Notes $ — 
(1)
 April 15, 2025 6.00  % April 15 and
October 15th		 N/A
2026 Notes 1,000  June 15, 2026 3.38  % June 15 and December 15
March 15, 2026 (2)
2027 Notes 750 
(4)
 June 15, 2027 8.00  % June 15 and December 15
March 15, 2027 (3)
2030 Notes 375 
(5)
 September 15, 2030 3.75  % February 15th and August 15th N/A
2034 Notes
 700 
(1)
 July 1, 2034 6.38  %
July 1st and
January 1st
 N/A
(1)In the third quarter of 2024, we issued $700 million principal amount of Senior Unsecured Notes due in July 2034 (“2034 Notes”), which bear interest at a rate of 6.375%. The notes were issued for gross proceeds of $695 million, resulting in a yield to maturity of 6.476%. We used a portion of the proceeds from this issuance to redeem the outstanding principal amount of the 2025 notes. There was no premium paid upon redemption.
(2)Prior to this date, we may redeem, at our option, some or all of the 2026 Notes for the outstanding principal amount plus the applicable “make-whole” premium as defined in the indenture governing the 2026 Notes plus accrued and unpaid interest through the redemption date. In addition, prior to this date, we may redeem up to 40% of the Senior Unsecured Notes using the proceeds of certain equity offerings at a price equal to par plus the coupon percentage of the principal amount thereof, plus accrued but unpaid interest, if any, to, but excluding, the applicable redemption date. On, or subsequent to, this date we may redeem the 2026 Notes in whole or in part at redemption prices defined in the indenture governing the 2026 Notes, plus accrued and unpaid interest though the redemption date.
(3)Prior to this date, we may redeem, at our option, some or all of the 2027 Notes for the outstanding principal amount plus the applicable “make-whole” premium as defined in the indenture governing the 2027 Notes plus accrued and unpaid interest through the redemption date. In addition, prior to this date, we may redeem up to 40% of the Senior Unsecured Notes using the proceeds of certain equity offerings at a price equal to par plus the coupon percentage of the principal amount thereof, plus accrued but unpaid interest, if any, to, but excluding, the applicable redemption date. On, or subsequent to, this date we may redeem the 2027 Notes in whole or in part at a price equal to 100% of the principal amount, plus accrued and unpaid interest though the redemption date.
(4)In January 2024 in a follow-on offering we issued $200 million principal amount of 2027 Notes for net proceeds of $204 million, equivalent to a yield to maturity of 7.08% for the new issuance.
(5)We issued the $375 million aggregate principal amount of the 2030 Notes for total proceeds of $371 million ($367 million net of issuance costs) at an effective interest rate of 3.87%. We may redeem the 2030 Notes in whole or in part at redemption prices defined in the indenture governing the 2030 Notes plus accrued and unpaid interest though the redemption date.
The following table presents a summary of the components of the Senior Unsecured Notes:
  September 30, 2024 December 31, 2023
(in millions)
Principal $ 2,825  $ 2,325 
Accrued interest 40  15 
Unamortized premium (discount) (3) (3)
Less: Unamortized financing costs (22) (18)
Carrying value of Senior Unsecured Notes $ 2,840  $ 2,319 
The following are summarized terms of the Convertible Notes as of September 30, 2024:
Outstanding Principal Amount Maturity Date Stated Interest Rate Interest Payment Dates Conversion/Exchange Ratio Conversion/Exchange Price Issuable Shares
Dividend Threshold Amount (1)
(in millions) (in millions)
2025 Exchangeable Senior Notes 200 
(2)
 May 1,
2025		 0.000  % N/A 17.7969 $56.19 3.6 $0.375
2028 Exchangeable Senior Notes 403  August 15,
2028		 3.750  % February 15 and August 15 36.9028 $27.10 14.9 $0.395
(1)The conversion or exchange ratio is subject to adjustment for dividends declared above these amounts per share per quarter and certain other events that may be dilutive to the holder.
(2)The 2025 Exchangeable Senior Notes accrete to a premium at maturity equal to 3.25% per annum. The current balance including accreted premium is $217 million.
Schedule of Components of Convertible Notes
The following table presents a summary of the components of our Convertible Notes:

  September 30, 2024 December 31, 2023
(in millions)
Principal $ 603  $ 603 
Accrued interest 2  6 
Premium 16  11 
Less: Unamortized financing costs (8) (10)
Carrying value of Convertible Notes
 $ 613  $ 610 
Schedule of Material Terms for Capped Calls The material terms of the Capped Calls are as follows:
(in millions except per share data)
Aggregate cost of capped calls $ 38 
Initial strike price per share $ 27.14 
Initial cap price per share $ 43.42 
Shares of our common stock covered by the capped calls 14.8
Expiration date August 15, 2028
Schedule of Interest Rate Swaps
In connection with several of our long-term borrowings, including floating-rate loans from our Term Loan Facility, unsecured revolving credit facility, Secured Term Loan and the anticipated refinancings of certain of our Senior Unsecured Notes we have entered into the following derivative transactions that are designated as cash flow hedges as of September 30, 2024:
Instrument type Hedged Rate Notional Value Fair Value as of
Index September 30, 2024 December 31, 2023 Term of derivative and forecasted transactions
$ in millions
Interest rate swap 1 month SOFR 3.79% $ 400  $ (16) $ (12) March 2023 to March 2033
Interest rate swap Overnight SOFR 2.98% 400  6  7  June 2026 to June 2033
Interest rate swap Overnight SOFR 3.09% 600  5  7  June 2026 to June 2033
Interest rate swap Overnight SOFR 3.08% 400  — 
(1)
 8  April 2025 to April 2035
Interest rate collar 1 month SOFR
3.70% - 4.00%
(2)
 250  (1) —  May 2023 to May 2026
Interest rate swaps Overnight SOFR
4.39% to 4.42%
(3)
 170  (9) (8) September 2023 to June 2033
Interest rate swap Overnight SOFR 3.72  % 375 (10) —  June 2027 to June 2037
$ 2,595  $ (25) 2
(1)     This swap was financially settled in June 2024, for a benefit of $19 million. The $19 million is in AOCI as of September 30, 2024 and will be amortized into interest expense over the term of the 2034 Notes.
(2)    Interest rate collar consists of a purchased interest rate cap of 4.00% and a written interest rate floor of 3.70%.
(3)     Consists of three interest rate swaps with identical maturities and effective dates.
Schedule of Changes in AOCI
The below table shows the changes in our AOCI balance related to our interest rate derivatives designated and qualifying as effective cash flow hedges:
(Amounts in millions)
Beginning Balance - January 1, 2023 $ — 
Changes in fair value 7 
Amounts released into interest expense (6)
Ending Balance - December 31, 2023 $ 1 
Changes in fair value (18)
Amounts released into interest expense 8 
Ending Balance - September 30, 2024
 $ (9)
Schedule of Benefit (Expense) Included in Interest Expense
The below table shows the benefit (expense) included in interest expense as a result of our hedging activities for the three and nine months ended September 30, 2024 and 2023, respectively. We expect an expense of $2 million to be released out of AOCI into interest expense over the 12 months following September 30, 2024.
Three months ended September 30, Nine months ended September 30,
2024 2023 2024 2023
(in thousands)
Interest expense
 $ 59,401  $ 43,295  $ 180,804  $ 120,413 
Benefit (expense) included in interest expense due to hedging activities 2,817  2,278  8,432  3,725