By Paul A. Harris
Portland, Ore., Nov. 17 – NRG Energy, Inc. priced an upsized $1.53 billion of senior notes (Ba2/BB+) in two tranches of Tuesday, according to market sources.
A $1.03 billion amount of 10.25-year notes priced at par to yield 3 5/8%. The yield printed 12.5 basis points tighter than the 3¾% to 4% yield talk. Initial guidance was 4%.
A $500 million amount of 8.25-year notes priced at par to yield 3 3/8%. The 8.25-year notes also came 12.5 bps tighter than yield talk, which was 3½% to 3¾%. Initial guidance had the 8.25-year notes coming to yield 25 bps inside of the 10.25-year notes.
The overall amount of the high-yield issuance increased from $1.465 billion.
Citigroup Global Markets Inc. was the left active bookrunner. Credit Suisse Securities (USA) LLC was the joint active bookrunner.
Joint bookrunners were 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.
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 company was also in the market with $1.465 billion of senior secured notes (Baa3/BBB-) in two tranches.
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.
| Issuer: | NRG Energy, Inc.
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| Amount: | $1.53 billion, increased from $1.465 billion
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| Securities: | Senior notes
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| Lead active bookrunner: | Citigroup Global Markets Inc.
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| Joint active bookrunner: | Credit Suisse Securities (USA) LLC
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| Joint bookrunners: | 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.
|
| Senior co-manager: | Natixis Securities Americas LLC
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| Co-manager: | KeyBanc Capital Markets Inc.
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| Trade date: | Nov. 17
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| Settlement date: | Dec. 2
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| Ratings: | Moody's: Ba2
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| S&P: BB+
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| Distribution: | Rule 144A and Regulation S for life
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| Marketing: | Roadshow
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|
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| 8.25-year notes
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| Amount: | $500 million
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| Maturity: | Feb. 15, 2029
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| Coupon: | 3 3/8%
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| Price: | Par
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| Yield: | 3 3/8%
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| Spread: | 274 bps
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| First call: | Feb, 15, 2024 at 101.688
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| Equity clawback: | 40% at 103.375 until Feb. 15, 2024
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| Price talk: | 3½% to 3¾%
|
|
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| 10.25-year notes
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| Amount: | $1.03 billion
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| Maturity: | Feb. 15, 2031
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| Coupon: | 3 5/8%
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| Price: | Par
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| Yield: | 3 5/8%
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| Spread: | 275 bps
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| First call: | Feb. 15, 2026 at 101.813
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| Equity clawback: | 40% at 103.625 until Feb. 15, 2026
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| Price talk: | 3¾% to 4%
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