Debt and Capital Leases

6 Months Ended

Jun. 30, 2019

Long-term debt and capital leases consisted of the following:



(In millions, except rates)	June 30, 2019			December 31, 2018			Interest rate %

Recourse debt:
Senior Notes, due 2024	$	—		$	733		6.250
Senior Notes, due 2026	1,000			1,000			7.250
Senior Notes, due 2027	1,230			1,230			6.625
Senior Notes, due 2028	821			821			5.750
Senior Notes, due 2029	733			—			5.250
Convertible Senior Notes, due 2048	575			575			2.750
Senior Secured First Lien Notes, due 2024	600			—			3.750
Senior Secured First Lien Notes, due 2029	500			—			4.450
Term Loan Facility ^(a)	—			1,698			L+1.75
Tax-exempt bonds	466			466			4.125 - 6.00
Subtotal recourse debt	5,925			6,523
Non-recourse debt:
Agua Caliente Borrower 1, due 2038	83			86			5.430
Midwest Generation	—			48			4.390
Other	34			34			various
Subtotal all non-recourse debt	117			168
Subtotal long-term debt (including current maturities)	6,042			6,691
Capital leases	1			1			various
Subtotal long-term debt and capital leases (including current maturities)	6,043			6,692
Less current maturities	(87		)	(72		)
Less debt issuance costs	(71		)	(70		)
Discounts	(91		)	(101		)
Total long-term debt and capital leases	$	5,794		$	6,449

(a) As of December 31, 2018, the interest rate was 1-month LIBOR plus 1.75%

Recourse Debt

Senior Notes

Issuance of 2029 Senior Notes

On May 14, 2019, NRG issued $733 million of aggregate principal amount at par of 5.25% senior unsecured notes due 2029, or the 2029 Senior Notes. The 2029 Senior Notes are senior unsecured obligations of NRG and are guaranteed by certain of its subsidiaries. Interest will be paid semi-annually beginning on December 15, 2019, until the maturity date of June 15, 2029. The proceeds from the issuance of the 2029 Senior Notes were utilized to redeem the Company's remaining 6.25% Senior Notes due 2024.

Issuance of 2024 and 2029 Senior Secured First Lien Notes

On May 28, 2019, NRG issued $1.1 billion of aggregate principal amount of senior secured first lien notes, consisting of $600 million 3.75% senior secured first lien notes due 2024 and $500 million 4.45% senior secured first lien notes due 2029, or the Senior Secured First Lien Notes, at a discount. The Senior Secured First Lien Notes are guaranteed on a first-priority basis by each of NRG’s current and future subsidiaries that guarantee indebtedness under its credit agreement. The Senior Secured First Lien Notes will be secured by a first priority security interest in the same collateral that is pledged for the benefit of the lenders under NRG’s credit agreement, which consists of a substantial portion of the property and assets owned by NRG and the guarantors. The collateral securing the Senior Secured First Lien Notes will be released if the Company obtains an investment grade rating from two out of the three rating agencies, subject to an obligation to reinstate the collateral if such rating agencies withdraw the Company's investment grade rating or downgrade its rating below investment grade. Interest will be paid semi-annually beginning on December 15, 2019, until the maturity dates of June 15, 2024 and June 15, 2029. The proceeds from the issuance of the Senior Secured First Lien Notes, together with cash on hand, were used to repay the Company's 2023 Term Loan Facility.

2024 Senior Notes Redemption

During the three months ended June 30, 2019, the Company redeemed $733 million of its 6.25% Senior Notes due 2024 and recorded a loss on debt extinguishment of $29 million, which included the write-off of previously deferred debt issuance costs of $5 million.

Senior Credit Facility

2023 Term Loan Facility Repayment

On May 28, 2019, the Company repaid its $1.7 billion 2023 Term Loan Facility using the proceeds from the issuance of the Senior Secured First Lien Notes, as well as cash on hand, resulting in a decrease of $594 million to long-term debt outstanding. The Company recorded a loss on debt extinguishment of $17 million, which included the write-off of previously deferred debt issuance costs of $13 million. As a result of the repayment of the outstanding 2023 Term Loan Facility, the Company terminated the related interest rate swap agreements, which were in-the-money, and received $25 million that was recorded as a reduction to interest expense.

Revolving Credit Facility Modification

On May 28, 2019, the Company amended its existing credit agreement to, among other things, (i) provide for a $184 million increase in revolving commitments, resulting in aggregate revolving commitments under the amended credit agreement equal to $2.6 billion, (ii) extend the maturity date of the revolving loans and commitments under the amended credit agreement to May 28, 2024, (iii) provide for a release of the collateral securing the amended credit agreement if NRG obtains an investment grade rating from two out of the three rating agencies, subject to an obligation to reinstate the collateral if such rating agencies withdraw NRG’s investment grade rating or downgrade NRG’s rating below investment grade, (iv) reduce the applicable margins for borrowings under (a) ABR Revolving Loans from 1.25% to 0.75% and (b) Eurodollar Revolving Loans from 2.25% to 1.75%, (v) add a sustainability-linked pricing metric that permits an interest rate adjustment tied to NRG meeting targets related to environmental sustainability and (vi) make certain other changes to the existing covenants.

Non-Recourse Debt

Agua Caliente Borrower 1

On January 22, 2019, the lenders of the Agua Caliente Borrower 1 debt notified Agua Caliente Borrower 1, a subsidiary of the Company, of certain defaults under the financing agreement as it relates to the bankruptcy filing made by PG&E on January 29, 2019. PG&E is the offtaker of the underlying contracts, which are material to the project. The financing was entered into along with Agua Caliente Borrower 2, LLC, a subsidiary of Clearway Energy Inc., which is joint and several to the parties. The Company is working with the lenders to determine a path forward.

Cottonwood - Letters of Credit

On January 4, 2019, the Company entered into an $80 million credit agreement to issue letters of credit, which is currently supporting the Cottonwood facility lease. Annual fees of 1.33% on the facility are paid quarterly in advance. As of June 30, 2019, the full $80 million was issued.