Xcel Energy has announced the launch of three cash tender offers totalling up to $345mn for mortgage bonds issued by Northern States Power Company, a Minnesota-based subsidiary fully owned by the group. The operation targets three separate bond series maturing between 2044 and 2046, with acceptance based on a defined priority level.
The company specified that bonds will be accepted according to the priority levels set out in the offer documents, with no proration within each series. If a series is accepted, all validly tendered bonds in that tranche will be fully purchased. The total outstanding amount for the targeted bonds stands at $950mn, distributed across $350mn, $300mn, and $300mn tranches respectively.
Details of the bonds targeted by the offer
The first series, ranked highest in priority, consists of 3.600% bonds maturing on May 15, 2046. The second carries a 4.000% rate and matures on August 15, 2045. The third, with a 4.125% rate, is set to mature on May 15, 2044. All three series use the same reference security for pricing — 4.625% US Treasury bonds due November 15, 2045 — with a fixed spread of 45 basis points.
The energy group stated the transaction is being carried out under the terms set out in the “Offer to Purchase” dated December 15, together with the notice of guaranteed delivery. Conditions of the offer include a maximum purchase cap, although its specific threshold was not disclosed.
Strategic aim of the operation
The initiative forms part of Xcel Energy’s proactive debt management strategy, aiming to reduce its long-term obligations and improve financing costs. The bonds were issued by Northern States Power Company, a core operational entity for the group in the northern United States.
The company did not confirm whether the operation would be followed by a refinancing issue or whether other financial instruments might be considered. The move may reflect internal expectations at Xcel Energy regarding future interest rate trends and current bond market conditions.
