Debt

12 Months Ended

Dec. 31, 2023

Debt Disclosure [Abstract]

DEBT

DEBT

NON-RECOURSE DEBT — The following table summarizes the carrying amount and terms of non-recourse debt at our subsidiaries as of the periods indicated (in millions):

NON-RECOURSE DEBT	Weighted Average Interest Rate	Maturity	December 31,
			2023		2022
Variable Rate:
Bank loans	7.39%	2024 - 2045	$	5,568	$	3,306
Notes and bonds	4.62%	2024 - 2047	1,768		2,137
Revolver borrowings	7.18%	2024 - 2027	2,356		1,832
Other	11.85%	2024 - 2030	31		71
Fixed Rate:
Bank loans	7.20%	2024 - 2064	1,473		461
Notes and bonds	5.09%	2024 - 2079	11,228		11,130
Other (1)	5.90%	2024 - 2061	53		801
Unamortized (discount) premium & debt issuance (costs), net			(333)		(309)
Subtotal			$	22,144	$	19,429
Less: Current maturities (2)			(3,924)		(1,752)
Noncurrent maturities (2)			$	18,220	$	17,677

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(1)    Other fixed rate debt as of December 31, 2022 includes $756 million at Mong Duong, which was classified as held and used as of December 31, 2022, but is classified as held-for-sale as of December 31, 2023. See Note 24—Held-for-Sale and Dispositions for further information.

(2)    Excludes $8 million and $6 million (current) and $262 million and $169 million (noncurrent) finance lease liabilities included in the respective non-recourse debt line items on the Consolidated Balance Sheets as of December 31, 2023 and 2022, respectively. See Note 14—Leases for further information.

The interest rate on variable rate debt represents the total of a variable component that is based on changes in an interest rate index and a fixed component. The Company has interest rate swap agreements that economically fix the variable component of the interest rates on the portion of the variable rate debt being hedged in an aggregate notional principal amount of approximately $2.7 billion on non-recourse debt outstanding at December 31, 2023.

The following table summarizes the amounts due under our non-recourse debt agreements for the next five years and thereafter, as of December 31, 2023 (in millions):

December 31,	Annual Maturities
2024	$	3,935
2025	2,232
2026	3,515
2027	2,566
2028	932
Thereafter	9,297
Unamortized (discount) premium & debt issuance (costs), net	(333)
Total	$	22,144

As of December 31, 2023, AES subsidiaries with facilities under construction had a total of approximately $1.3 billion of committed but unused credit facilities available to fund construction and other related costs. Excluding these facilities under construction, AES subsidiaries had approximately $1.7 billion in various unused committed credit lines to support their working capital, debt service reserves and other business needs. These credit lines can be used for borrowings, letters of credit, or a combination of these uses.

Significant transactions — During the year ended December 31, 2023, the Company’s following subsidiaries had significant debt issuances (in millions):

Subsidiary	Issuances (1)
AES Clean Energy	$	2,654
Netherlands and Colon	350
AES Indiana	300
AES Ohio	300

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(1)These amounts do not include revolving credit facility activity at the Company's subsidiaries.

AES Ohio — The $300 million of debt issued at AES Ohio is primarily related to $200 million of First Mortgage Bonds issued in December 2023 in a private placement offering, in which AES Ohio issued $92 million aggregate principal of 5.49% bonds and $108 million aggregate principal of 5.70% bonds due in 2028 and 2033, respectively. The net proceeds from the issuances were used primarily to repay existing indebtedness and for general corporate purposes.

AES Indiana — In November 2023, AES Indiana executed a $300 million term loan due in 2024. The net proceeds from this issuance were used for general corporate purposes.

Netherlands and Colon — In March 2022, AES Hispanola Holdings BV, a Netherlands based company, and Colon, as co-borrowers, executed a $500 million bridge loan due in 2023. The Company allocated $450 million and $50 million of the proceeds from the agreement to AES Hispanola Holdings BV and Colon, respectively.

In January 2023, AES Hispanola Holdings BV and Colon, as co-borrowers, executed a $350 million credit agreement at 8.85%, due in 2028. The Company allocated $300 million and $50 million of the proceeds from the agreement to AES Hispanola Holdings BV and Colon, respectively. The net proceeds from the agreement were used to partially repay the $500 million bridge loan executed in 2022. The remaining principal outstanding of the bridge loan was repaid with proceeds from operating cash flows as well as cash from the Parent Company. As a result of these transactions, the Company recognized a loss on extinguishment of debt of $1 million.

United Kingdom — On January 6, 2022, Mercury Chile HoldCo LLC (“Mercury Chile”), a UK based company, executed a $350 million bridge loan and used the proceeds, as well as an additional capital contribution of $196 million from the Parent Company, to purchase the minority interest in AES Andes through intermediate holding companies (see Note 17—Equity for further information). On January 24, 2022, Mercury Chile issued $360 million aggregate principal of 6.5% senior secured notes due in 2027 and used the proceeds from the issuance to fully prepay the $350 million bridge loan.

AES Clean Energy — In December 2023, Bellefield Portfolio Seller, LLC and Bellefield 1 Finco, LLC, subsidiaries of AES Clean Energy Development, executed a construction, tax equity bridge, and letter of credit financing agreement for commitments of up to $2.4 billion due in 2026. As of December 31, 2023, there was $998 million in outstanding borrowings under the facilities, and the net proceeds were used primarily to repay existing indebtedness and to fund development of renewables projects.

In October 2023, Rexford I Holdings, LLC, a subsidiary of AES Renewable Holdings, executed a $300 million bridge loan due in 2024. The net proceeds from this issuance were used primarily to fund development of renewables projects.

In December 2022, AES Renewable Holdings OpCo 1, LLC executed a term loan in the amount of $632 million due in 2027. The proceeds were used to prepay the outstanding principal of $692 million of its six credit facilities. As a result of this transaction, the Company recognized a loss on extinguishment of debt of $12 million.

In December 2022, AES Clean Energy Development, AES Renewable Holdings, and sPower, an equity method investment, collectively referred to as the Issuers, entered into a Master Indenture agreement whereby long-term notes will be issued from time to time to finance or refinance operating wind, solar, and storage projects that are owned by the Issuers. On December 13, 2022, the Issuers entered into the Note Purchase Agreement for the issuance of up to $647 million of 6.55% Senior Notes due in 2047. The Notes were sold on December 14, 2022, at par for $647 million. In 2023, the Issuers sold an additional $246 million in 6.37% notes. As a result of the additional issuance and repayments, the aggregate principal amount of Notes outstanding was $884 million as of December 31, 2023. Each of the Issuers is considered a “Co-Issuer” and will be jointly and severally liable with each other Co-Issuer for all obligations under the facility. As a result of the 2023 issuance, AES Clean Energy Development recorded an increase in liabilities of $215 million, resulting in an aggregate carrying amount of the Notes attributable to AES Clean Energy Development and AES Renewable Holdings of $252 million as of December 31, 2023.

In 2021, AES Clean Energy Development, AES Renewable Holdings, and sPower, collectively referred to as the Borrowers, executed two Credit Agreements with aggregate commitments of $1.2 billion and maturity dates in December 2024 and September 2025. The Borrowers executed amendments to the revolving credit facilities, which have resulted in an aggregate increase in the commitments of $2.6 billion, bringing the total commitments under the new agreements to $3.8 billion. Under a 2023 amendment, the maturity date of one of the Credit Agreements was extended from December 2024 to May 2026. Each of the Borrowers is considered a “Co-Borrower” and will be jointly and severally liable with each other Co-Borrower for all obligations under the facilities. As a result of increases in commitments used, AES Clean Energy Development and AES Renewable Holdings recorded, in aggregate, an increase in liabilities of $1 billion in 2023, resulting in total commitments used under the revolving credit facilities, as of December 31, 2023, of $2.3 billion. As of December 31, 2023, the aggregate commitments used under the revolving credit facilities for the Co-Borrowers was $2.8 billion.

Non-Recourse Debt Covenants, Restrictions and Defaults — The terms of the Company's non-recourse debt include certain financial and nonfinancial covenants. These covenants are limited to subsidiary activity and vary among the subsidiaries. These covenants may include, but are not limited to, maintenance of certain reserves and financial ratios, minimum levels of working capital and limitations on incurring additional indebtedness.

As of December 31, 2023 and 2022, approximately $341 million and $424 million, respectively, of restricted cash was maintained in accordance with certain covenants of the non-recourse debt agreements. Of these amounts, $158 million and $285 million, respectively, were included within Restricted cash and $183 million and $139 million, respectively, were included within Debt service reserves and other deposits in the accompanying Consolidated Balance Sheets. As of December 31, 2023 and 2022, approximately $90 million and $56 million, respectively, of the restricted cash balances were for collateral held to cover potential liability for current and future insurance claims being assumed by AGIC, AES' captive insurance company.

Various lender and governmental provisions restrict the ability of certain of the Company's subsidiaries to transfer their net assets to the Parent Company. Such restricted net assets of subsidiaries amounted to approximately $901 million at December 31, 2023.

The following table summarizes the Company's subsidiary non-recourse debt in default (in millions) as of December 31, 2023. Due to the defaults, these amounts are included in the current portion of non-recourse debt:

	Primary Nature of Default	December 31, 2023
Subsidiary		Debt in Default		Net Assets
AES Mexico Generation Holdings (TEG and TEP)	Covenant	$	150	$	24
AES Puerto Rico	Covenant/Payment	143		(170)
AES Ilumina (Puerto Rico)	Covenant	25		29
AES Jordan Solar	Covenant	7		11
Total		$	325

The amounts in default related to AES Puerto Rico are covenant and payment defaults. In July 2023, AES Puerto Rico signed forbearance and standstill agreements with its noteholders because of the insufficiency of funds to meet the principal and interest obligations on its Series A Bond Loans due and payable on June 1, 2023, and going forward. These agreements expired on December 31, 2023 and were extended until January 17, 2024. Although there is no forbearance in place after January 17, 2024, AES Puerto Rico continues to work with PREPA and its noteholders on these liquidity challenges.

All other defaults listed are not payment defaults. All other subsidiary non-recourse defaults were triggered by failure to comply with covenants or other requirements contained in the non-recourse debt documents of the applicable subsidiary.

The AES Corporation's recourse debt agreements include cross-default clauses that will trigger if a subsidiary provides 20% or more of the Parent Company's total cash distributions from businesses for the four most recently completed fiscal quarters and has an outstanding principal in excess of $200 million in default. As of December 31, 2023, the Company's subsidiaries had no defaults which resulted in a cross-default under the recourse debt of the Parent Company. In the event the Parent Company is not in compliance with the financial covenants of its revolving credit facility, restricted payments will be limited to regular quarterly shareholder dividends at the then-prevailing rate. Payment defaults and bankruptcy defaults would preclude the making of any restricted payments.

RECOURSE DEBT — The following table summarizes the carrying amount and terms of recourse debt of the Company as of the periods indicated (in millions):

	Interest Rate	Final Maturity	December 31, 2023		December 31, 2022
Senior Variable Rate Term Loan	SOFR + 1.125%	2024	$	200	$	200
Senior Unsecured Note	3.30%	2025	900		900
Senior Unsecured Note	1.375%	2026	800		800
Drawings on revolving credit facility	SOFR + 1.75%	2027	—		325
Senior Unsecured Note	5.45%	2028	900		—
Senior Unsecured Note	3.95%	2030	700		700
Senior Unsecured Note	2.45%	2031	1,000		1,000
Unamortized (discount) premium & debt issuance (costs), net			(36)		(31)
Subtotal			$	4,464	$	3,894
Less: Current maturities			(200)		—
Noncurrent maturities			$	4,264	$	3,894

The following table summarizes the principal amounts due under our recourse debt for the next five years and thereafter (in millions):

December 31,	Annual Maturities
2024	$	200
2025	900
2026	800
2027	—
2028	900
Thereafter	1,700
Unamortized (discount) premium & debt issuance (costs), net	(36)
Total recourse debt	$	4,464

Senior Notes due 2028 — In May 2023, the Company issued $900 million aggregate principal of 5.45% senior notes due in 2028. The Company used the proceeds from this issuance for general corporate purposes and to fund investments in the Company’s Renewables and Utilities SBUs.

AES Clean Energy Development — In March 2023, AES Clean Energy Development Holdings, LLC executed a $500 million bridge loan due in December 2023 and used the proceeds for general corporate purposes. The obligations under the bridge loan were unsecured and fully guaranteed by the Parent Company. The bridge loan was repaid in December 2023.

Commercial Paper Program — In March 2023, the Company established a commercial paper program under which the Company may issue unsecured commercial paper notes (the “Notes”) up to a maximum aggregate face amount of $750 million outstanding at any time. The maturities of the Notes may vary but will not exceed 397 days from the date of issuance. The proceeds of the Notes will be used for general corporate purposes. The Notes will be sold on customary terms in the U.S. commercial paper market on a private placement basis. The commercial paper program is backed by the Company's $1.5 billion revolving credit facility, and the Company cannot issue commercial paper in an aggregate amount exceeding the then available capacity under its revolving credit facilities. During 2023, the Company borrowed and repaid approximately $45.8 billion under the commercial paper program, with average daily outstanding borrowings of $449 million. As of December 31, 2023, the Company had no outstanding borrowings under the commercial paper program.

Revolving Credit Facility — In September 2022, AES executed an amendment to its revolving credit facility. The aggregate commitment under the new agreement is $1.5 billion and matures in August 2027. The existing credit agreement had an aggregate commitment of $1.25 billion and matured in September 2026. As of December 31, 2023, AES had no outstanding drawings under its revolving credit facility.

Term Loan due 2024 — In September 2022, the AES Corporation entered into a term loan agreement, under which AES can obtain term loans in an aggregate principal amount of up to $200 million, with all term loans to mature no later than September 30, 2024. On September 30, 2022 the AES Corporation borrowed $200 million under this agreement with a maturity date of September 30, 2024.

Recourse Debt Covenants and Guarantees — The Company's obligations under the revolving credit facility and indentures governing the senior notes due 2025 and 2030 are currently unsecured following the achievement of two investment grade ratings and the release of security in accordance with the terms of the facility and the notes. If the Company’s credit rating falls below "Investment Grade" from at least two of Fitch Investors Service Inc., Standard & Poor’s Ratings Services or Moody’s Investors Service, Inc., as determined in accordance with the terms

of the revolving credit facility and indenture dated May 15, 2020 (BBB-, or in the case of Moody’s Investor Services, Inc. Baa3), then the obligations under the revolving credit facility and the indentures governing the senior notes due 2025 and 2030 become, subject to certain exceptions, secured by (i) all of the capital stock of domestic subsidiaries owned directly by the Company or certain subsidiaries and 65% of the capital stock of certain foreign subsidiaries owned directly by the Company and certain subsidiaries, and (ii) certain intercompany receivables, certain intercompany notes and certain intercompany tax sharing agreements.

The revolving credit facility contains customary covenants and restrictions on the Company's ability to engage in certain activities, including, but not limited to, limitations on liens; restrictions on mergers and acquisitions and the disposition of assets; and other financial reporting requirements.

The revolving credit facility also contains one financial covenant, evaluated quarterly, requiring the Company to maintain a maximum ratio of recourse debt to adjusted operating cash flow of 5.75 times.

The terms of the Company's senior notes contain certain customary covenants, including limitations on the Company's ability to incur liens or enter into sale and leaseback transactions.