Xcel Energy proposes $2 billion in convertible notes due in 2027
Key Facts
Xcel Energy said on November 2, 2026, that it intends to offer $2 billion in aggregate principal amount of senior convertible notes due in 2027, subject to market conditions and other terms, according to a filing with the U.S. Securities and Exchange Commission. The company said net proceeds would be used to repay part of its outstanding borrowings under commercial paper and part of a 364-day delayed-draw term loan. Any remaining proceeds would be used for general corporate purposes. The proposed offering is part of financing needs tied to a multiyear capital spending program. The company has not yet announced the notes' final financial terms.
The private placement will be offered to qualified institutional buyers under Rule 144A. Initial purchasers may buy up to an additional $300 million of notes during the 13 days beginning on the date of their initial issuance. Xcel has not set the initial conversion price, interest rate or other terms; it said those details would be determined when the offering is priced. The final financing cost and conversion terms therefore remain undisclosed. If the notes are converted, the company will pay cash up to the principal amount, while any excess value may be settled in cash, common shares or a combination of the two, at its election.
Xcel plans baseline capital spending of $70 billion during 2027–2031 and estimates it will be financed with $35.81 billion from operating cash after dividends and pension funding, $26.19 billion of new debt net of refinancing, and $8 billion from equity issuance. The company describes these figures as its current estimates for the financing plan, which are subject to change. The proposed debt issuance would therefore form part of a financing mix that includes operating resources, borrowing and equity. Third-quarter data also showed total debt of $40.598 billion on September 30, 2026, compared with $33.883 billion on December 31, 2025. Short-term debt rose to $3.060 billion from $1.550 billion over the same period.
The company already relies on equity markets as well as borrowing to finance its plan. In the third quarter of 2026, it issued 10.5 million shares, generating net proceeds of $819 million through settlements of forward sale agreements or at-the-market cash offerings. A total of 79.4 million shares remained unsettled under forward sale agreements on September 30, with minimum expected proceeds of $5.8 billion. Xcel said in its quarterly report that it expects to meet future financing needs through periodic issues of short- and long-term debt, equity, hybrid securities and other instruments, with the aim of maintaining its targeted capitalization ratios. This shows that the proposed notes offering would come alongside other financing channels the company uses.
In its third-quarter results, the company reported GAAP earnings of $960 million, or $1.52 per share, compared with $524 million and $0.88 per share in the same period of 2025. Operating earnings were $961 million, or $1.52 per share, versus $737 million and $1.24 per share a year earlier. Xcel attributed the improvement in operating earnings mainly to increased recovery of electric infrastructure investments, equity-method investment earnings and unseasonably warm weather. It said higher financing costs partially offset the improvement. Its 2027 operating earnings guidance is $4.48 to $4.62 per share, while the company targets long-term annual earnings-per-share growth of 6% to 8% or more and annual dividend increases of 4% to 6%.
The parent company had $739 million in liquidity on October 27, 2026, including $660 million available under a credit facility and $79 million in cash, according to the results report. A $1.5 billion term loan is also due in January 2027. XEL shares closed at $79.82 on October 30, before the offering was announced on November 2; these figures do not represent the stock's movement after the announcement. The conversion price, interest rate and other terms are expected to be set when the offering is priced. Settlement of any value exceeding the principal remains at the company's election under the announced terms.