Summary
This 8-K filing from Xcel Energy Inc. (XEL) addresses inquiries regarding potential collateral requirements for its subsidiary, NRG Energy, Inc. (NRG), should NRG's unsecured credit rating fall below investment grade. As of December 31, 2001, approximately $960 million in collateral would be required if NRG were downgraded by Moody's, which had placed NRG's rating on review for potential downgrade in December 2001. This collateral is spread across NRG's project-level financings, power marketing activities, and a significant contingent equity guarantee related to its construction/acquisition revolver.
Key Highlights
- 1Xcel Energy is disclosing potential collateral needs for its subsidiary NRG Energy due to a credit rating review by Moody's.
- 2As of Dec 31, 2001, approximately $960 million in collateral would be required if NRG's credit rating drops below investment grade.
- 3The potential collateral is allocated across debt service reserve accounts ($200M), power marketing ($400M), and a contingent equity guarantee ($360M).
- 4NRG's credit ratings are BBB- (S&P) and Baa3 (Moody's), with Moody's rating on review for potential downgrade.
- 5NRG plans to meet potential collateral obligations using cash, existing credit lines, liquidity support from Xcel Energy, and potential debt issuance.
- 6NRG's revolving credit line is expected to increase from $500M to $1B in March 2002, with total credit facilities planned to reach $1.25B in 2002.
- 7The potential collateral requirement could increase to approximately $1.45 billion by the end of 2002 as NRG utilizes its construction/acquisition revolver further.