Moody's upgraded NRG Energy Inc.'s corporate family rating to Ba1 from Ba2, its senior unsecured rating to Ba2 from Ba3 and its senior secured tax-exempt bonds to Baa2 from Baa3. The outlook is positive.

The rating agency also upgraded NRG's probability of default rating to Ba1-PD.

The merchant generator was upgraded twice in the past two years after implementing a transformation strategy that included selling noncore businesses, simplifying its corporate structure, enhancing cash flows and reducing leverage.

The positive outlook by Moody's on the company reflects management's commitment to maintaining its net debt-to-EBITDA ratio of 2.5x to 2.75x, and the favorable power price environment in Texas.

The rating agency said Dec. 13 that it expects NRG to generate more than $1 billion of annual free cash flow.