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NRG Energy prices $3.6B, two-part bond issue; terms

NRG Energy completed a $3.6 billion, two-tranche issue of senior notes to back an acquisition of Texas Genco, sources said. Bookrunners Morgan Stanley and Citigroup priced both issues at the tight end of guidance, and dropped a floating-rate tranche. The broad geographic reach of the merged company and expected stable cash flows stoked investor demand for the public offering. Moreover, investors liked the company’s exposure to lower-cost fuel sources, such as coal and nuclear power, and its plans to continue a conservative hedging strategy. The size of the deal places it second only to the $3.75 billion issue backing the leveraged buyout of RJR Nabisco by Kohlberg Kravis & Roberts in 1989. The company issued the bonds alongside a $5.2 billion senior secured credit package, common shares and mandatory convertible preferred stock. Terms:

Issuer: NRG Energy Inc
Ratings: B-/B1/B
Size: $1.2 billion
Issue: senior notes (off-the-shelf)
Coupon: 7.25%
Price: par
Yield: 7.25%
Spread: +277
LIBOR Eq: +225
Maturity: 02/01/2014
Call: nc4
Trade: 01/26/2006
Settle: 02/02/2006 (t+5)
Books: MS/CITI
Co’s: LEH, BAS, DB, GS, ML
Px Talk: 12.5-25 bps inside 10-yr
Notes: Calls: 2010 @103.625, 2011 @101.813, 2012 @100, w/ three-year equity clawback for up to 35% of issue @107.25
Issuer: NRG Energy Inc
Ratings: B-/B1/B
Size: $2.4 billion
Issue: senior notes (off-the-shelf)
Coupon: 7.375%
Price: par
Yield: 7.375%
Spread: +290
LIBOR Eq: +238
Maturity: 02/01/2016
Call: nc5
Trade: 01/26/2006
Settle: 02/02/2006 (t+5)
Books: MS/CITI
Co’s: LEH, BAS, DB, GS, ML
Px Talk: 7.375-7.625%
Notes: Calls: 2011 @103.688, 2012 @102.458, 2013 @101.229, 2014 @100; w/ three-year equity clawback for up to 35% of issue @107.375