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Clearway Energy (CWEN) Unit Prices $350-Million Green Bond

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Clearway Energy Inc. CWEN announced that its subsidiary Clearway Energy Operating LLC has priced an offering of $350 million of 3.75% senior notes due 2032. The notes will be issued at 100% of their face value. The note offering is expected to close on Oct 1, 2021, subject to customary closing conditions.

The company intends to utilize the net proceeds of the offering, together with existing corporate liquidity, firstly to repurchase any and all of the $350 million outstanding aggregate principal amount of its 5.000% senior notes due 2026, and secondly to pay fees and expenses incurred in connection with the repurchase of the 2026 Notes.

Many companies are making the best utilization of the current low rate environment to refinance their existing high interest-bearing debts to lower capital servicing costs. This move from Clearway Energy’s unit will lower annual interest expenses of the company by nearly $4.4 million. In the first half of the year, it redeemed old debts with proceeds from low interest-bearing debts, which lowered annual interest expenses by $10 million.

Focus on Clean Electricity Production

Clearway Energy’s generation portfolio includes a substantial number of solar and wind generation assets. It expects to achieve high fleet availability and modest maintenance-related capital expenditure. The new and long-lived assets in the portfolio give the company a competitive advantage and boost margins. The total wind and solar portfolio currently stands at 4,744 MW. It resorts to organic initiatives and acquisitions to expand the clean power generation portfolio.

Clearway Operating intends to allocate an amount equal to the net proceeds from the offering of the new notes to finance or refinance, in part or full, new and existing projects along with assets meeting certain renewable energy generation eligibility criteria.

Going Green is the New Goal

Per the U.S. Energy Information Administration release, clean renewables’ share in the U.S. electricity generation mix will increase from 21% in 2020 to 42% in 2050, with wind and solar being the major contributors. The utilities are also trying to commercially utilize new sources of clean energy and reduce their carbon footprint.

The Utility sector was one of the major contributors to greenhouse gas emissions but now a clean transition is evident in the energy space, with an increasing number of companies coming out with plans of producing more energy from clean sources on their own. Companies like Dominion Energy D, Duke Energy DUK and Exelon Corporation EXC, among others, have decided to become net-zero carbon emitters by 2050.

Price Performance

Shares of the company have outperformed the industry in the past six months.

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Zacks Rank

The company currently carries a Zacks Rank #3 (Hold).

You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

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