Research Update: NRG Energy Inc. Upgraded To 'BB+' From 'BB' On Improved Credit Metrics And Transaction Announcement, Outlook Stable

NRG Energy Inc.'s (NRG) cost-cutting initiatives and debt reduction and a relatively muted impact from the coronavirus pandemic have lowered adjusted debt to EBITDA to about 3.20x-3.25x as of June 30, 2020. We are raising our issuer credit rating and senior unsecured debt rating on NRG Energy to 'BB+' from 'BB'. The outlook is stable. Our action applies to nearly $6 billion of senior secured and senior unsecured debt obligations, but only senior unsecured debt ratings will change from this action (see list below). We have also factored NRG's commitment to use excess cash flow for deleveraging. Specifically, ratings factor our estimate of debt reduction commitment of about $1.0 billion by year end 2021. NRG has announced the acquisition of

...- NRG Energy Inc.'s (NRG) cost-cutting initiatives and debt reduction and a relatively muted impact from the coronavirus pandemic have lowered adjusted debt to EBITDA to about 3.20x-3.25x as of June 30, 2020. - We are raising our issuer credit rating and senior unsecured debt rating on NRG Energy to '##+' from '##'. The outlook is stable. Our action applies to nearly $6 billion of senior secured and senior unsecured debt obligations, but only senior unsecured debt ratings will change from this action (see list below). - We have also factored NRG's commitment to use excess cash flow for deleveraging. Specifically, ratings factor our estimate of debt reduction commitment of about $1.0 billion by year end 2021. - NRG has announced the acquisition of Direct Energy, the North American retail power business of Centrica Plc. Full details of the financing for the $3.625 billion transaction have not yet been announced. - While the transaction is expected to increase leverage to an estimated 3.75x...

Research Update