Assessing Hawaiian Electric's 2033 Senior Notes: Credit Upgrades and Renewable Energy Market Dynamics

Hawaiian Electric Industries (HEI) has recently navigated a pivotal shift in its credit profile, with major rating agencies upgrading its debt ratings in the wake of improved liquidity and progress in resolving wildfire-related liabilities. These upgrades, coupled with broader trends in renewable energy infrastructure financing, position HEI's 2033 Senior Notes as a compelling case study for investors evaluating credit quality and yield attractiveness in a transforming energy sector.

Credit Quality: A Turnaround in Ratings

In June 2025, Fitch upgraded HEI's issuer default ratings (IDRs) to 'BB-' from 'B', with a positive outlook, while Moody's and S&P followed suit, raising their long-term ratings to 'Ba2' and 'B+', respectivelyQuarterly Report for Quarter Ending June 30, 2025 (Form)^[1]. These upgrades reflect HEI's efforts to stabilize its balance sheet after years of litigation costs stemming from the 2023 Lahaina wildfires. According to a report by Hawaiian Electric, the company has strengthened liquidity through cost-cutting measures and insurance settlements, reducing its exposure to prolonged legal disputesMoody's upgrades Hawaiian Electric Industries' credit ...^[4].

The improved credit metrics are critical for HEI's ability to access capital. Prior to the upgrades, downgrades had constrained its borrowing flexibility, pushing up financing costsQuarterly Report for Quarter Ending June 30, 2025 (Form)^[1]. Now, with a more favorable rating outlook, HEI's 2033 Senior Notes—though details of the private offering remain undisclosed—could benefit from reduced spreads compared to its recent debt offerings. This aligns with broader market trends: energy companies with stronger credit profiles have seen narrower yield spreads in 2025, even as borrowing costs across the sector have risenEnergy financing and funding^[3].

Yield Attractiveness in a Renewable Energy Context

While specific terms of HEI's 2033 Senior Notes are unavailable, comparative analysis of renewable energy infrastructure bonds offers insight into potential yield dynamics. Renewable energy projects have increasingly attracted investors seeking credit-aligned pricing, with green bonds and clean energy infrastructure demonstrating resilience amid macroeconomic volatilityConnectedness between green bonds, clean energy^[2]. For instance, data from the International Energy Agency (IEA) indicates that renewable developers secured average yields 15–20 basis points lower than traditional utilities in Q2 2025, reflecting investor confidence in their long-term cash flow visibilityEnergy financing and funding^[3].

HEI's transition to a cleaner energy mix—targeting 100% carbon-free electricity by 2045—could further enhance the appeal of its debt. Although the 2033 Senior Notes are not explicitly labeled as green bonds, the company's alignment with decarbonization goals may attract ESG-focused investors willing to accept slightly lower yields for creditworthy, sector-aligned assetsConnectedness between green bonds, clean energy^[2]. This contrasts with traditional utilities, where regulatory uncertainties and fossil fuel exposure have widened risk premiums.

Risks and Considerations

Despite the positive momentum, investors should remain cautious. HEI's credit upgrades hinge on sustained progress in wildfire litigation and operational efficiency. A relapse in liquidity or regulatory setbacks could trigger a reversal in its rating trajectory. Additionally, the absence of disclosed terms for the 2033 Senior Notes—such as coupon rate, issue size, and use of proceeds—limits transparency. Without this data, direct comparisons to peers like NextEra Energy or Ørsted remain speculative.

Conclusion

Hawaiian Electric's recent credit upgrades signal a turning point in its financial trajectory, offering a foundation for competitive financing terms in its 2033 Senior Notes. While the lack of specific offering details introduces uncertainty, the broader renewable energy bond market's resilience and credit-aligned pricing suggest that HEI's debt could attract investor interest, particularly from ESG-focused portfolios. However, the absence of granular data underscores the need for due diligence, as the ultimate yield attractiveness will depend on HEI's ability to maintain its credit momentum and align its capital structure with evolving market demands.