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Debt and Finance Leases | 12 Months Ended
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Dec. 31, 2019
Debt Disclosure [Abstract] |
Debt and Finance Leases | Debt and Finance Leases Long-term debt and finance leases consisted of the following:
(In millions, except rates) | December 31, 2019 |  | December 31, 2018 |  | December 31, 2019 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(a) | 575 |  |  | 575 |  |  | 2.750 |
Senior Secured First Lien Notes, due 2024 | 600 |  |  | — |  |  | 3.750 |
Senior Secured First Lien Notes, due 2029 | 500 |  |  | — |  |  | 4.450 |
2023 Term Loan Facility (b) | — |  |  | 1,698 |  |  | L+ 1.75
Revolving Credit Facility (c) | 83 |  |  | — |  |  | L+ 1.75
Tax-exempt bonds | 466 |  |  | 466 |  |  | 4.125 - 6.00
Subtotal recourse debt | 6,008 |  |  | 6,523 |  |  |  |
Non-recourse debt: |  |  |  |  |
Agua Caliente Borrower 1, due 2038 | — |  |  | 86 |  |  | 5.430 |
Midwest Generation, due 2019 | — |  |  | 48 |  |  | 4.390 |
Other | 34 |  |  | 34 |  |  | various
Subtotal all non-recourse debt | 34 |  |  | 168 |  |  |
Subtotal long-term debt (including current maturities) | 6,042 |  |  | 6,691 |  |  |
Finance leases | — |  |  | 1 |  |  | various
Subtotal long-term debt and finance leases (including current maturities) | 6,042 |  |  | 6,692 |  |  |
Less current maturities | (88) |  |  | (72) |  |  |
Less debt issuance costs | (65) |  |  | (70) |  |  |
Discounts | (86) |  |  | (101) |  |  |
Total long-term debt and finance leases | $ | 5,803 |  |  | $ | 6,449 |  |  |
(a) The effective interest rate was 5.05% and 5.02% for the years ended December 31, 2019 and 2018, respectively (b) As of December 31, 2018, the interest rate was 1-month LIBOR plus 1.75% (c) As of December 31, 2019, the interest rate was 1-week LIBOR plus 1.75% Debt includes the following discounts:
|  | As of December 31, |  |
(In millions) |  | 2019 |  | 2018
Term loan facility, due 2023 |  | $ | — |  |  | $ | (4) |
Midwest Generation, due 2019 |  | — |  |  | (1) |
Senior Secured First Lien Notes, due 2024 and 2029 |  | (1) |  |  | — |
Convertible Senior Notes, due 2048 |  | (85) |  |  | (96) |
Total discounts |  | $ | (86) |  |  | $ | (101) |
Consolidated Annual Maturities As of December 31, 2019, annual payments based on the maturities of NRG's debt are expected to be as follows:
| (In millions)
2020(a) | $ | 88 |
2021 | 6 |
2022 | 5 |
2023 | 4 |
2024 | 604 |
Thereafter | 5,335 |
Total | $ | 6,042 |
(a) Includes $83 million of Revolving Credit Facility balance outstanding as of December 31, 2019 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. 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 $10 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. 2019 Senior Note Redemptions During the year ended December 31, 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. 2018 Senior Note Repurchases During the year ended December 31, 2018, the Company completed senior note repurchases, as detailed in the table below. In addition, during the year ended December 31, 2018, a $38 million loss on debt extinguishment was recorded for these repurchases, which included the write-off of previously deferred financing costs of $7 million.
(In millions, except percentages) |  | Principal Repurchased |  | Cash Paid (a) |  | Average Early Redemption Percentage
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 |  | 493 |  |  | 512 |  |  | 103.13 | %
5.750% senior notes due 2028 |  | 20 |  |  | 20 |  |  | 99.13 | %
6.625% senior notes due 2027 |  | 20 |  |  | 21 |  |  | 103.06 | %
Total at September 30, 2018 |  | $ | 576 |  |  | $ | 598 |  |  |
6.250% senior notes due 2022 |  | 485 |  |  | 508 |  |  | 103.13 | %
Total at December 31, 2018 |  | $ | 1,061 |  |  | $ | 1,106 |  |  |
(a) Includes accrued interest of $14 million Senior Notes Early Redemption As of December 31, 2019, NRG had the following outstanding issuances of senior notes with an early redemption feature, or Senior Notes: i. 7.250% senior notes, issued May 23, 2016 and due May 15, 2026, or the 2026 Senior Notes; ii. 6.625% senior notes, issued August 2, 2016 and due January 15, 2027, or the 2027 Senior Notes; iii. 5.750% senior notes, issued December 7, 2017 and due January 15, 2028, or the 2028 Senior Notes; and iv. 5.250% senior notes, issued May 24, 2019 and due June 15, 2029 , or the 2029 Senior Notes The Company periodically enters into supplemental indentures for the purpose of adding entities under the Senior Notes as guarantors. The indentures and the forms of notes provide, among other things, that the Senior Notes will be senior unsecured obligations of NRG. The indentures also provide for customary events of default, which include, among others: nonpayment of principal or interest; breach of other agreements in the indentures; defaults in failure to pay certain other indebtedness; the rendering of judgments to pay certain amounts of money against NRG and its subsidiaries; the failure of certain guarantees to be enforceable; and certain events of bankruptcy or insolvency. Generally, if an event of default occurs, the Trustee or the Holders of at least 25% in principal amount of the then outstanding series of Senior Notes may declare all of the Senior Notes of such series to be due and payable immediately. The terms of the indentures, among other things, limit NRG's ability and certain of its subsidiaries' ability to return capital to stockholders, grant liens on assets to lenders and incur additional debt. Interest is payable semi-annually on the Senior Notes until their maturity dates. 2026 Senior Notes At any time prior to May 15, 2021, NRG may redeem all or a part of the 2026 Senior Notes, at a redemption price equal to 100%of the principal amount, accrued and unpaid interest to the redemption date, plus a premium. The premium is the greater of: (i) 1% of the principal amount of the notes; or (ii) the excess of the principal amount of the note over the following: the present value of 103.625% of the note, plus interest payments due on the note from the date of redemption through May 15, 2021 computed using a discount rate equal to the Treasury Rate as of such redemption date plus 0.50%. In addition, on or after May 15, 2021, NRG may redeem some or all of the notes at redemption prices expressed as percentages of principal amount as set forth in the following table, plus accrued and unpaid interest on the notes redeemed to the first applicable redemption date:
Redemption Period | Redemption Percentage
May 15, 2021 to May 14, 2022 | 103.625 | %
May 15, 2022 to May 14, 2023 | 102.417 | %
May 15, 2023 to May 14, 2024 | 101.208 | %
May 15, 2024 and thereafter | 100.000 | %
2027 Senior Notes At any time prior to July 15, 2021, NRG may redeem all or a part of the 2027 Senior Notes, at a redemption price equal to 100% of the principal amount, accrued and unpaid interest to the redemption date, plus a premium. The premium is the greater of: (i)1% of the principal amount of the notes; or (ii) the excess of the principal amount of the note over the following: the present value of 103.313% of the note, plus interest payments due on the note from the date of redemption through July 15, 2021 computed using a discount rate equal to the Treasury Rate as of such redemption date plus 50% In addition, on or after July 15, 2021, NRG may redeem some or all of the notes at redemption prices expressed as percentages of principal amount as set forth in the following table, plus accrued and unpaid interest on the notes redeemed to the first applicable redemption date:
Redemption Period | Redemption Percentage
July 15, 2021 to July14, 2022 | 103.313 | %
July 15, 2022 to July 14, 2023 | 102.208 | %
July 15, 2023 to July 14, 2024 | 101.104 | %
July 15, 2024 and thereafter | 100.000 | %
2028 Senior Notes At any time prior to January 15, 2021, NRG may redeem up to 35% of the aggregate principal amount of the 2028 Senior Notes, at a redemption price equal to 105.750% of the principal amount of the notes redeemed, plus accrued and unpaid interest, with an amount equal to the net cash proceeds of certain equity offerings. At any time prior to January 15, 2023, NRG may redeem all or a part of the 2028 Senior Notes, at a redemption price equal to 100% of the principal amount, accrued and unpaid interest to the redemption date, plus a premium. The premium is the greater of: (i) 1% of the principal amount of the notes; or (ii) the excess of the principal amount of the note over the following: the present value of 102.875% of the note, plus interest payments due on the note from the date of redemption through January 15, 2023 computed using a discount rate equal to the Treasury Rate as of such redemption date plus 50% In addition, on or after January 15, 2023, NRG may redeem some or all of the notes at redemption prices expressed as percentages of principal amount as set forth in the following table, plus accrued and unpaid interest on the notes redeemed to the first applicable redemption date:
Redemption Period | Redemption Percentage
January 15, 2023 to January 14, 2024 | 102.875 | %
January 15, 2024 to January 14, 2025 | 101.917 | %
January 15, 2025 to January 14, 2026 | 100.958 | %
January 15, 2026 and thereafter | 100.000 | %
2029 Senior Notes At any time prior to June 15, 2022, NRG may redeem up to 40% of the aggregate principal amount of the 2029 Senior Notes, at a redemption price equal to 105.250% of the principal amount of the notes redeemed, plus accrued and unpaid interest, with an amount equal to the net cash proceeds of certain equity offerings, provided that at least 50% of the aggregate principal amount remains outstanding immediately after the occurrence of such redemption. At any time prior to June 15, 2024, NRG may redeem all or a part of the 2029 Senior Notes, at a redemption price equal to 100% of the principal amount accrued and unpaid interest to the redemption date, plus a premium. The premium is the greater of: (i) 1% of the principal amount of the notes; or (ii) the excess of the principal amount of the note over the following: the present value of 102.625% of the note, plus interest payments due on the note through June 15, 2024 (excluding accrued but unpaid interest to the redemption date), computed using a discount rate equal to the Treasury Rate as of such redemption date plus 0.50%. In addition, on or after June 15, 2024, NRG may redeem some or all of the notes at redemption prices expressed as percentages of principal amount as set forth in the following table, plus accrued and unpaid interest on the notes redeemed to the first applicable redemption date:
Redemption Period | Redemption Percentage
June 15, 2024 to June 14, 2025 | 102.625 | %
June 15, 2025 to June 14, 2026 | 101.750 | %
June 15, 2026 to June 14, 2027 | 100.875 | %
June 15, 2027 and thereafter | 100.000 | %
Senior Credit Facility On June 30, 2016, NRG replaced its previous senior credit facility with a new senior secured facility, or the Senior Credit Facility, which included the following: •A $1.9 billion term loan facility, or the 2023 Term Loan Facility, with a maturity date of June 30, 2023, which will pay interest at a rate of LIBOR plus 2.75%, with a LIBOR floor of 0.75%. The debt was issued at 99.50% of face value; the discount will be amortized to interest expense over the term of the loan. Repayments under the 2023 Term Loan Facility will consist of 0.25% of principal per quarter, with the remainder due at maturity. On January 24, 2017, NRG repriced the 2023 Term Loan Facility, reducing the interest rate margin by 50 basis points to LIBOR plus 2.25%, the LIBOR floor remains 0.75%. On March 21, 2018, NRG again 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%. •A $289 million revolving senior credit facility, or the Tranche A Revolving Facility, with a maturity date of July 1, 2018 and a $2.2 billion revolving senior credit facility, or the Tranche B Revolving Facility, with a maturity date of June 30, 2021, which both pay interest at a rate of LIBOR plus 2.25%. On May 7, 2018, NRG entered into the third amendment agreement extending the maturity date of the Tranche A revolving facility to June 30, 2021, for the Tranche A accepting lender. In accordance with the terms of the Credit Agreement, on October 5, 2018, the Company initiated an asset sale offer to purchase a portion of its Term Loan following the sale of NRG Yield and the Renewables Platform. The offer expired on November 5, 2018 and $260 million of Term Loan holders accepted the offer. As a result, the Company prepaid $155 million of Term Loans as part of its de-leveraging plan, as well as established an incremental first lien secured term loan facility under the Senior Credit Facility in the aggregate principal amount of $105 million on the same terms and conditions to stay within its debt reduction target. In addition, a $3 million loss on debt extinguishment was recorded, which included the write-off of previously deferred financing costs of $2 million. 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 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 thing, (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 form 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 and (vi) make certain other changes to the existing covenants. As of December 31, 2019, $83 million of borrowings were outstanding. Tax Exempt Bonds
|  | As of December 31, |  |  |  |
(In millions, except rates) |  | 2019 |  | 2018 |  | Interest Rate %
Indian River Power, tax exempt bonds, due 2040 |  | $ | 57 |  |  | $ | 57 |  |  | 6.000 |
Indian River Power LLC, tax exempt bonds, due 2045 |  | 190 |  |  | 190 |  |  | 5.375 |
Dunkirk Power LLC, tax exempt bonds, due 2042 |  | 59 |  |  | 59 |  |  | 5.875 |
City of Texas City, tax exempt bonds, due 2045 |  | 33 |  |  | 33 |  |  | 4.125 |
Fort Bend County, tax exempt bonds, due 2038 |  | 54 |  |  | 54 |  |  | 4.750 |
Fort Bend County, tax exempt bonds, due 2042 |  | 73 |  |  | 73 |  |  | 4.750 |
Total |  | $ | 466 |  |  | $ | 466 |  |  |
Non-Recourse Debt The following are descriptions of certain indebtedness of NRG's subsidiaries. All of NRG's non-recourse debt is secured by the assets in the respective project subsidiaries as further described below. Midwest Generation On April 7, 2016, Midwest Generation, LLC, or MWG, entered into an agreement to sell certain quantities of unforced capacity that has cleared various PJM Reliability Pricing Model auctions to a trading counterparty for net proceeds of $253 million. MWG continued to operate the applicable generation facilities and remained responsible for performance penalties and eligible for performance bonus payments, if any. Accordingly, MWG continued to account for all revenues and costs as before; however, the proceeds were recorded as a financing obligation while capacity payments by PJM to the counterparty was reflected as debt amortization and interest expense through the end of the 2018/19 delivery year. MWG amortized the upfront discount to interest expense, at an effective interest rate of 4.39%, through June 2019. Agua Caliente Borrower I On January 22, 2019, the lenders of the Agua Borrower I 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. On October 21, 2019, the Company repaid the outstanding amount on the notes at 102% plus accrued interest through the payment date. 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 December 31, 2019, the full $80 million was issued.

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- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -URI http://asc.fasb.org/topic&trid=2208564 + Details
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