S&P rates NRG Energy notes BB

S&P said it assigned a BB rating and 3 recovery rating to NRG Energy Inc.'s proposed $733 million senior unsecured notes due 2029.

The 3 recovery rating indicates 50% to 70% expected default recovery.

The proceeds will be used from these notes to retire a commensurate amount of its outstanding debt maturing in 2024, S&P said.

While the company is targeting a net debt-to-EBITDA ratio of 2.5x by year-end 2019, the agency said it also imputes more than $1 billion of debt pertaining to unfunded pensions, operating leases and asset-retirement obligations.

The BB issuer credit rating on NRG is based on a fair assessment of its business risk profile and a significant assessment of its financial risk profile, S&P said.

If the company continues to execute on its plan, which includes expanding its margins and reducing its debt, the agency said it could revise the outlook to positive or raise the rating by year-end 2019.

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