NRG Prices $1.1B Senior Notes - Analyst Blog

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NRG Energy, Inc. ( NRG ) announced that it has priced $1.1 billion of 6.25% senior notes. The notes will mature on Jul 15, 2022. The company expects to close the note offering on Jan 27, 2014. Initially, NRG Energy had planned to offer senior notes, worth $0.7 billion, due 2022.

The company intends to utilize a portion of the net proceeds of the issue to finance the Edison Mission Energy ("EME") acquisition. NRG Energy also plans to allocate a part of the proceeds to redeem its 8.50% senior notes and 7.625% senior notes, worth up to $0.4 billion, due 2019, and also pay the allied costs and expenses. The rest will be utilized for general corporate purposes.

NRG Energy made full use of the prevailing market conditions and decided to issue new notes bearing a lower coupon rate. This will enable the company to reduce its cost of capital and extend its debt maturities.

NRG Energy issues senior notes from time to time to refinance its existing debts and for other corporate purposes. On Sep 10, 2012, the company issued and priced 6.625% senior notes worth $0.99 billion, due 2023. The company utilized the net proceeds along with the cash balance to repurchase its existing 7.375% senior notes, due 2017.

NRG Energy's cash in hand as of Sep 30, 2013 was $2.13 billion versus $2.09 billion as of Dec 31, 2012. Strong cash position along with systematic financial plans enable the company expand as well as diversify its portfolio through inorganic as well as organic growth strategy. In Oct 2013, the company entered into an agreement to acquire all assets of EME for $2.6 billion. This acquisition is expected to provide substantial financial as well as operational synergies to the company.

At the end of third-quarter 2013, the company's long term debt-to-equity ratio was 145.2%, up from 139.0% at the end of the prior-year quarter. With the completion of the debt refinancing plan, NRG Energy's long-term debt-to-equity ratio is expected to increase in the future.

NRG Energy currently has a Zacks Rank #5 (Strong Sell). However, some better-ranked stocks in the same sector include Wisconsin Energy Corp. ( WEC ), The AES Corporation ( AES ) and ALLETE, Inc. ( ALE ). While Wisconsin Energy holds a Zacks Rank #1 (Strong Buy), The AES Corp. and ALLETE carry a Zacks Rank #2 (Buy).



AES CORP (AES): Free Stock Analysis Report

ALLETE INC (ALE): Free Stock Analysis Report

NRG ENERGY INC (NRG): Free Stock Analysis Report

WISC ENERGY CP (WEC): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: AES , ALE , NRG , WEC

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