Research Update: NRG Energy Inc. 'BB+' Issuer Credit Rating Affirmed; Acquisition-Related Debt Issuance Also Rated

Earlier this year, NRG Energy Inc. announced the acquisition of Direct Energy, the North American retail power business of Centrica PLC. NRG is now raising debt to finance that acquisition. We are affirming our 'BB+' issuer credit rating on NRG Energy and assigned our 'BBB-' and 'BB+' issue-level ratings to NRG's $2.93 billion senior secured and senior unsecured debt, respectively. Our ratings analysis factors in NRG's commitment to use excess cash flow for deleveraging. Specifically, we factor in a debt reduction commitment of about $1.15 billion by year-end 2021. We expect the transaction to close no earlier than year-end 2020 with an increase in leverage to an estimated 3.8x. We also expect a concomitant improvement in the company's pro forma

...- Earlier this year, NRG Energy Inc. announced the acquisition of Direct Energy, the North American retail power business of Centrica PLC. NRG is now raising debt to finance that acquisition. - We are affirming our '##+' issuer credit rating on NRG Energy and assigned our '###-' and '##+' issue-level ratings to NRG's $2.93 billion senior secured and senior unsecured debt, respectively. - Our ratings analysis factors in NRG's commitment to use excess cash flow for deleveraging. Specifically, we factor in a debt reduction commitment of about $1.15 billion by year-end 2021. - We expect the transaction to close no earlier than year-end 2020 with an increase in leverage to an estimated 3.8x. We also expect a concomitant improvement in the company's pro forma business risk profile, which we will update at close. Our assessment subsumes our credit opinion on stand-alone NRG Energy and the potential impact on its business and financial risk profiles. - Pro forma for the transaction, NRG will have...

Research Update