Generator Preps Hybrid Bond

AES Gener plans to sell $450m in new junior subordinated hybrid bonds, according to a Fitch report assigning a BB rating to the transaction. Starting Wednesday, the Chilean generator will market the deal in Lima, Hong Kong, Santiago, Singapore, Los Angeles, Switzerland, Boston and London, before ending in New York December 4 or 5, according to people familiar with the process. Citi and Goldman Sachs are managing. The bond should have a 2073 maturity, and allow Gener to raise funds to finance its equity contributions to the Alto Maipo hydroelectric and Cochrane coal-fired generation projects in Chile, as well as to repay upcoming maturities and for general corporate purposes. It was approved for a $450m equity capital raise in August. The hybrid notes will receive a 50% equity credit, Fitch says, given that interest payments on the notes are deferrable at the company’s discretion. Also, the notes’ subordinated ranking provides loss absorption for more senior indebtedness of the company. As a result of the proposed debt issuance, the company’s consolidated leverage is expected to increase above 4.5x by 2015, which is considered to be more in line with its senior BBB minus rating.