NextDecade Corp 10-K

Item 7A. Quantitative and Qualitative Disclosures About Market Risk Interest Rate Risk As of December 31, 2025, our exposure to market risk for changes in interest rates related primarily to the Project Credit Facilities and the FinCo Loan. Each of these debt facilities accrues interest at SOFR or a similar floating benchmark rate, plus in each case an applicable margin. Therefore, fluctuations in interest rates will impact our consolidated financial statements. A rising interest rate environment will increase the amount of interest paid on these loans. The Rio Grande Project Entities have entered into interest rate hedge arrangements to manage the interest rate exposure under their respective credit facilities, and FinCo similarly has entered into interest rate hedge arrangements to manage the interest rate exposure under the FinCo Loan. The Project Credit Facilities each contain a covenant requiring that interest rates for a minimum of 75% of the projected principal amount of the applicable entity’s senior secured debt be hedged or have fixed interest rates. The FinCo Credit Agreement also contains a requirement that that interest rates for a minimum of 90% of the projected principal amount of the FinCo Loan outstanding be hedged or have fixed interest rates. For the year ended December 31, 2025, a hypothetical 100 basis point increase in interest rates would have resulted in an impact of less than $1 million on our consolidated net loss. To the extent we utilize additional debt financing in support of future phases of development, we may incur fixed or floating rate debt or a combination thereof. We will also have exposure to changes in interest rates with respect to any floating rate debt we incur, unless we enter into interest rate hedges with respect to any such exposure. Commodity Price Risk Following the commencement of operations at the Rio Grande LNG Facility, we will have exposure to changes in commodity prices. Under our LNG SPAs, our customers will purchase LNG from the Rio Grande LNG Facility for a price consisting of a fixed fee per MMBtu of LNG plus a variable fee per MMBtu of LNG, with the variable fees structured to cover the expected cost of natural gas plus fuel and other sourcing costs to produce LNG. As a result, changes in the price of feed gas will impact our operating margins. In addition, there may be differences between the actual price we pay for feed gas and the Henry Hub gas price used to calculate the variable fees under the relevant LNG SPA. Our operating margins would be affected by any such differences.