Debt and Capital Leases

This footnote should be read in conjunction with the complete description under Note 12, Debt and Capital Leases, to the Company's 2017 Form 10-K. Long-term debt and capital leases consisted of the following:



(In millions, except rates)	June 30, 2018			December 31, 2017			June 30, 2018 interest rate % ^(a)

Recourse debt:
Senior Notes, due 2022	$	977		$	992		6.250
Senior Notes, due 2024	733			733			6.250
Senior Notes, due 2026	1,000			1,000			7.250
Senior Notes, due 2027	1,250			1,250			6.625
Senior Notes, due 2028	841			870			5.750
Convertible Senior Notes, due 2048	575			—			2.750
Revolving loan facility, due 2018 and 2021	26			—			L+1.75
Term loan facility, due 2023	1,862			1,872			L+1.75
Tax-exempt bonds	465			465			4.125 - 6.00
Subtotal recourse debt	7,729			7,182
Non-recourse debt:
NRG Yield, Inc. Convertible Senior Notes, due 2019	345			345			3.500
NRG Yield, Inc. Convertible Senior Notes, due 2020	288			288			3.250
NRG Yield Operating LLC Senior Notes, due 2024	500			500			5.375
NRG Yield Operating LLC Senior Notes, due 2026	350			350			5.000
NRG Yield LLC and NRG Yield Operating LLC Revolving Credit Facility, due 2023^(b)	—			55			L+1.75
El Segundo Energy Center, due 2023	369			400			L+1.75 - L+2.375
Marsh Landing, due 2023	305			318			L+2.125
Alta Wind I - V lease financing arrangements, due 2034 and 2035	901			926			5.696 - 7.015
Walnut Creek, term loans due 2023	254			267			L+1.625
Utah Portfolio, due 2022	273			278			various
Tapestry, due 2021	155			162			L+1.625
CVSR, due 2037	731			746			2.339 - 3.775
CVSR HoldCo, due 2037	188			194			4.680
Alpine, due 2022	133			135			L+1.750
Energy Center Minneapolis, due 2031, 2033, 2035 and 2037	328			208			various
Viento, due 2023	154			163			L+3.00
Buckthorn Solar, due 2018 and 2025	132			169			L+1.750
NRG Yield - other	564			579			various
Subtotal NRG Yield debt (non-recourse to NRG) ^(c)	5,970			6,083
Ivanpah, due 2033 and 2038 ^(e)	—			1,073			2.285 - 4.256
Carlsbad Energy Project ^(c)	513			427			L+1.625 - 4.120
Agua Caliente, due 2037	812			818			2.395 - 3.633
Agua Caliente Borrower 1, due 2038	86			89			5.430
Cedro Hill, due 2025 ^(c)	144			151			L+1.75
Midwest Generation, due 2019	108			152			4.390
NRG Other Renewables ^(c)	623			478			various
NRG Other	107			180			various
Subtotal other NRG non-recourse debt	2,393			3,368
Subtotal all non-recourse debt	8,363			9,451
Subtotal long-term debt (including current maturities)	16,092			16,633
Capital leases	3			5			various
Subtotal long-term debt and capital leases (including current maturities)	16,095			16,638
Less current maturities^(d)	(952		)	(688		)
Less debt issuance costs	(199		)	(204		)
Discounts	(123		)	(30		)
Total long-term debt and capital leases	$	14,821		$	15,716

(a) As of June 30, 2018, L+ equals 3-month LIBOR plus x%, except for Carlsbad, the Buckthorn Solar and Utah Solar Portfolio where L+ equals 1 month LIBOR plus x% and Viento where L+ equals 6-month LIBOR plus x%.

(b) Applicable rate is determined by the Borrower Leverage Ratio, as defined in the credit agreement.

(d) The NRG Yield, Inc. Convertible Senior Notes, due 2019, become due in February 2019 and are recorded in current maturities as of June 30, 2018.

(e) The Company deconsolidated Ivanpah during the second quarter of 2018.

Recourse Debt

2023 Term Loan Facility

On March 21, 2018, NRG repriced the 2023 Term Loan Facility, reducing the interest rate margin by 50 basis points to LIBOR plus 1.75% and reducing the LIBOR floor to 0.00%.

Senior Notes

Issuance of 2048 Convertible Senior Notes

During the second quarter of 2018, NRG issued $575 million in aggregate principal amount of 2.75% Convertible Senior Notes due 2048, or the Convertible Notes. The Convertible Notes are convertible, under certain circumstances, into the Company's common stock, cash or a combination thereof (at NRG's option) at an initial conversion price of $47.74 per common share, which is equivalent to an initial conversion rate of approximately 20.9479 shares of common stock per $1,000 principal amount of Convertible Notes. Interest on the Convertible Notes is payable semi-annually in arrears on June 1 and December 1 of each year, commencing on December 1, 2018. The Convertible Notes mature on June 1, 2048, unless earlier repurchased, redeemed or converted in accordance with their terms. The Convertible Notes are guaranteed by certain NRG subsidiaries. Prior to the close of business on the business day immediately preceding December 1, 2024, the Convertible Notes will be convertible only upon the occurrence of certain events and during certain periods, and thereafter during specified periods as follows:

•from December 1, 2024 until the close of business on the second scheduled trading day immediately before June 1, 2025; and

•from December 1, 2047 until the close of business on the second scheduled trading day immediately before the maturity date.

The Convertible Notes are accounted for in accordance with ASC 470-20, Debt with Conversion and Other Options. Under ASC 470-20, issuers of convertible debt instruments that may be settled in cash upon conversion, including partial cash settlement, are required to separately account for the liability (debt) and equity (conversion option) components. The carrying amount of the liability component at issuance date of $472 million was calculated by estimating the fair value of similar liabilities without a conversion feature. The residual principal amount of the notes of $103 million was allocated to the equity component with offset to debt discount. The debt discount will be amortized to interest expense using the effective interest method over seven years which is determined to be the expected life of the Convertible Notes.

The Company incurred approximately $12 million in transaction costs in connection with the issuance of the notes. These costs were allocated to the liability and equity components in proportion to the allocation of proceeds. Transaction costs of $9.5 million, allocated to the liability component, were recognized as deferred financing costs and are amortized over the seven years. Transaction costs of $2 million, allocated to the equity component, were recognized as a reduction of additional paid-in capital.

Senior Note Repurchases

In connection with the Transformation Plan, the Company has committed to reduce its debt balance by an additional $640 million to achieve a target net debt to adjusted EBITDA credit ratio of 3.0/1. The following open market senior note repurchases were completed to assist in achieving this target.

In connection with the repurchases during the six months ended June 30, 2018, a $1 million loss on debt extinguishment was recorded, which included the write-off of previously deferred financing costs of $1 million.



	Principal Repurchased		Cash Paid ^(a)		Average Early Redemption Percentage
In millions, except rates
5.750% senior notes due 2028	$	29	$	30	99.24	%
6.250% senior notes due 2022	14		15		103.25	%
Total at June 30, 2018	$	43	$	45
6.250% senior notes due 2022	6		6		103.25	%
5.750% senior notes due 2028	20		21		99.13	%
6.625% senior notes due 2027	20		21		103.06	%
Total at August 2, 2018	$	89	$	93

(a) Includes payment for accrued interest of $1 million.

Non-recourse Debt

NRG Yield LLC and NRG Yield Operating LLC Revolving Credit Facility

NRG Yield LLC and its direct wholly owned subsidiary, NRG Yield Operating LLC, are parties to a senior secured revolving credit facility, which can be used for cash and for the issuance of letters of credit. On April 30, 2018, NRG Yield LLC and NRG Yield Operating LLC refinanced the revolving credit facility, which extended the maturity of the facility to April 28, 2023, and decreased the overall cost of borrowing from L+ 2.50% to L+1.75%. At June 30, 2018, there was $67 million of letters of credit issued under the revolving credit facility and no outstanding borrowings on the revolver.

Project Financings

Thermal Financing

On June 19, 2018, NRG Energy Center Minneapolis, a subsidiary of NRG Yield LLC, entered into an amended and restated Thermal note purchase and private shelf agreement whereas it authorized the issuance of the Series E Notes, Series F Notes, Series G Notes, and Series H Notes, as further described in the table below:



	Amount			Interest Rate
In millions, except rates
Energy Center Minneapolis Series E Notes, due 2033	$	70		4.80	%
Energy Center Minneapolis Series F Notes, due 2033	10			4.60	%
Energy Center Minneapolis Series G Notes, due 2035	83			5.90	%
Energy Center Minneapolis Series H Notes, due 2037	40			4.83	%
Total proceeds	$	203
Repayment of Energy Center Minneapolis Series C Notes, due 2025	(83		)	5.95	%
Net borrowings	$	120

The Series G Notes were used to refinance the Series C Notes due 2025. The amended and restated Thermal note purchase and private shelf agreement also established a private shelf facility for the future issuance of notes in the amount of $40 million.

Rosamond Financing

On June 4, 2018, Rosamond Solar Portfolio, LLC entered into a financing agreement with financial institutions for a $118 million construction loan, which will convert to a term loan upon completion of project construction and a $175 million investment tax credit, or ITC, bridge loan, both of which have an interest rate of LIBOR plus 1.75%, as well as a letter of credit facility with availability of up to $33 million. The ITC bridge loan is expected to be repaid with proceeds from a tax equity arrangement by April 30, 2019. The term loan matures on April 30, 2034. As of June 30, 2018, $83 million and $5 million had been borrowed under the construction loan and the ITC bridge loan, respectively.

Agua Caliente Project Financing

On February 17, 2017, Agua Caliente Borrower 1 LLC and Agua Caliente Borrower 2 LLC, or Agua Caliente Holdco, the indirect owners of 51% of the Agua Caliente solar facility, issued $130 million of senior secured notes under the Agua Caliente Holdco Financing Agreement, or 2038 Agua Caliente Holdco Notes, that bear interest at 5.43% and mature on December 31, 2038. As described in Note 3, Acquisitions, Discontinued Operations and Dispositions, on March 27, 2017, NRG Yield, Inc. acquired Agua Caliente Borrower 2 LLC from NRG. The debt is joint and several with respect to Agua Caliente Borrower 1 LLC and Agua Caliente Borrower 2 LLC and is secured by the equity interests of each borrower in the Agua Caliente solar facility.

Carlsbad Project Financing

On May 26, 2017, Carlsbad Energy Holdings, LLC entered into a note payable agreement with financial institutions for the issuance of up to $407 million of senior secured notes that bear interest at a rate of 4.12%, and mature on October 31, 2038, and a credit agreement for a $194 million construction loan, that will convert to a term loan upon completion of the project as well as a letter of credit facility with an aggregate principal amount not to exceed $83 million, and a working capital loan facility with an aggregate principal amount not to exceed $4 million. As of June 30, 2018, $513 million was outstanding under both the note and the construction loan.