Research Update: NRG Energy Inc. Outlook Revised To Positive On Accelerated Debt Paydowns And Strong Retail Performance; Ratings Affirmed

NRG Energy Inc.'s business transformation plan has resulted in the sale of several assets that, while reducing scale, have contributed to significantly better financial metrics as debt retirement has been accelerated. We are revising the outlook on NRG Energy to positive from stable, as well as are affirming our 'BB' issuer rating on the company and all issue-level ratings on its debt. The positive outlook reflects our expectation that the company's integrated wholesale and retail power strategy, cost-cutting initiatives, and optimization of assets will drop adjusted debt to EBITDA below 3.0x by year-end 2019 (our ratios are weaker than the company's calculations due to imputed debt adjustments, as well assumptions of lower power prices). We expect to raise the rating

...- NRG Energy Inc.'s business transformation plan has resulted in the sale of several assets that, while reducing scale, have contributed to significantly better financial metrics as debt retirement has been accelerated. - We are revising the outlook on NRG Energy to positive from stable, as well as are affirming our '##' issuer rating on the company and all issue-level ratings on its debt. - The positive outlook reflects our expectation that the company's integrated wholesale and retail power strategy, cost-cutting initiatives, and optimization of assets will drop adjusted debt to EBITDA below 3.0x by year-end 2019 (our ratios are weaker than the company's calculations due to imputed debt adjustments, as well assumptions of lower power prices). - We expect to raise the rating by a notch over the next one to two quarters on continued execution of the company's transformation plan and if it meets our expectation of summer 2019 performance....

Research Update