NRG outlook now negative on asset purchases-Moody’s

NEW YORK, Aug 13 (BestGrowthStock) – Moody’s Investors Service on
Friday changed its outlook on NRG Energy (NRG.N: ) to negative
from stable, making a downgrade more likely, after the company
said it would buy assets from Dynegy Inc.

NRG will buy some of Dynegyy private equity firm Blackstone
Group to buy Dynegy (DYN.N: ) in what will be one of the biggest
buyouts of a power company since Kohlberg Kravis Roberts
(KKR.N: ), TPG Capital [TPG.UL] and Goldman Sachs (GS.N: ) bought
power company TXU for $32 billion in 2007. For details, see
[ID:nN13179076]

“The change in rating outlook to negative from stable
reflects the company’s aggressive acquisition and growth
strategy,” Moody’s said in a statement.

A negative outlook indicates that Moody’s is likely to cut
NRG from Ba3, three levels below investment grade, over the
coming 12-to-18 months.

“These acquisitions, which follow three smaller
acquisitions completed during June 2010, come at a time when
the company’s future margins are likely to be compressed
relative to recent historical results and the company is in the
early stage of a multi-year, multi-faceted project development
strategy,” Moody’s said.

The cost to insure NRG’s debt in the credit default swap
market rose 30.5 basis points on Friday to 536.67 basis points,
or $536,670 per year to insure $10 million in debt for five
years, according to Markit Intraday.

(Reporting by Karen Brettell; Editing by Chizu Nomiyama)

NRG outlook now negative on asset purchases-Moody’s