Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Interest rate risk
The Company uses fixed and variable rate long-term debt to partially finance operations and capital expenditures which exposes the Company to market risk related to changes in interest rates. Higher interest rates have resulted in and will likely continue to result in higher borrowing costs on new debt and existing variable interest rate debt.
As of December 31, 2025, approximately 12.2 percent of the outstanding debt recorded on the balance sheet consisted of variable interest rate facilities (which uses SOFR as the benchmark rate). Based on balances outstanding for these borrowings as of December 31, 2025, an increase of 1 percent in the interest rate on the Company's outstanding variable interest rate facilities would result in an estimated $3.3 million pre-tax annual increase in interest expense over the next twelve months. For additional information on the Company's long-term debt, see Item 8 - Notes 8 and 9. At December 31, 2025 and 2024, the Company had no outstanding interest rate hedges.
The following table shows the amount of long-term debt, which excludes unamortized debt issuance costs and discount, and related weighted average interest rates, both by expected maturity dates, as of December 31, 2025.
2026 2027 2028 2029 2030 Thereafter Total Fair
Value
(Dollars in millions)
Long-term debt:
Fixed rate $ 144.7 $ 274.7 $ 79.7 $ 74.7 $ 146.7 $ 1,635.7 $ 2,356.2 $ 2,064.5
Weighted average interest rate
5.7 % 4.9 % 4.4 % 4.5 % 4.9 % 4.7 % 4.8 %
Variable rate $ — $ — $ — $ — $ 328.7 $ — $ 328.7 $ 328.7
Weighted average interest rate
— % — % — % — % 4.7 % — % 4.7 %
Commodity price risk
The Company enters into commodity price derivative contracts to minimize the price volatility associated with natural gas costs for its customers at its natural gas distribution segment. At December 31, 2025 and 2024, these contracts were not material. For more information on the Company's derivatives, see Item 8 - Note 2.
62 MDU Resources Group, Inc. Form 10-K
Index
Part II
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.