NRG Energy sets price talk in $1.47 billion two-part notes offering; pricing Tuesday

By Paul A. Harris

Portland, Ore., Nov. 17 – NRG Energy, Inc. set price talk in its $1.465 billion two-part offering of senior notes (expected Ba2/confirmed BB+), according to market sources.

The junk offer features 10.25-year notes callable after 5.25 years at par plus 50% of the coupon, talked to yield 3¾% to 4%. Initial guidance was 4%.

The offering also features 8.25-year notes callable after 3.25 years at par plus 50% of the coupon, talked to yield 3½% to 3¾%. Initial guidance had the 8.25-year notes coming to yield 25 basis points inside of the 10.25-year notes.

Tranche sizes remain to be determined.

Books close at noon ET on Tuesday, and Rule 144A and Regulation S for life deal is set to price thereafter.

Citigroup Global Markets Inc. is the left active bookrunner. Credit Suisse Securities (USA) LLC is the joint active bookrunner.

Barclays, BofA Securities Inc., BMO Capital Markets Corp., BNP Paribas Securities Corp., Credit Agricole CIB, Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Mizuho Securities USA Inc., Morgan Stanley & Co. LLC, MUFG, RBC Capital Markets Corp., SMBC Nikko Securities America Inc. and Truist Securities Inc. are joint bookrunners.

Natixis Securities Americas LLC is the senior co-manager. KeyBanc Capital Markets Inc. is the co-manager.

The notes come with a special mandatory redemption within 30 days of an acquisition triggering event. It requires the issuer to redeem a specified amount of each tranche at par. That amount will be set when the notes price. It will be set at a level such that the entire tranche is redeemed or at least $500 million of the tranche remains outstanding.

The two junk tranches are part of an overall $3.83 billion five-part offering of debt securities.

The company also plans to price $1.465 billion of senior secured notes (Baa3/BBB-) in two tranches. The long tranche features seven-year notes be issued under NRG’s sustainability linked bond framework, including reducing greenhouse gas emissions. The short duration investment-grade tranche features five-year senior secured notes.

Tranche sizes in the Rule 144A and Regulation S investment-grade portion of the deal also remain to be determined.

The power company, which has headquarters in Princeton, N.J., and Houston, plans to use the proceeds, together with cash on hand, to fund the Direct Energy acquisition and cover a portion of its incremental collateral needs.

In addition, special purpose vehicle Alexander Funding Trust plans to privately place $900 million of Rule 144A for life three-year pre capitalized trust securities (Baa3/BBB-).

Proceeds from the three-year securities will be used to purchase the required amount of eligible Treasury assets. NRG will not receive direct proceeds.

For the investment-grade rated tranches, Credit Suisse will be the left active bookrunner and Citigroup the joint active bookrunner.

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