Energy Transfer is moving to swap $1.75 billion of notes, a deal that could let the company avoid a 10% reset on its preferred shares. Dallas, July 11, 2026, 16:13 (CDT)
Energy Transfer LP NYSE:ET closed out the week up 1.7% at $19.66. The company priced $1.75 billion in new financing on Monday, which is likely to extend debt maturities. The deal could also get rid of a preferred-unit reset that would run near 10% using current Treasury yields.
This is coming up because the 6.5% Series H payout isn’t locked in. On Nov. 15, it will adjust to the five-year U.S. Treasury yield plus 5.694 points. As of Friday, the five-year was at 4.306%, which would push the rate close to 10% if that yield holds. The final November rate could be higher or lower.
Energy Transfer is raising $650 million with its 6.55% Series 2026A notes and another $1.1 billion with its 6.70% Series 2026B notes, both maturing in 2057. The weighted initial cost is 6.64%. These junior subordinated notes rank behind senior debt. The company expects $1.7325 billion in net proceeds before expenses, which it plans to use to redeem its $900 million Series H bonds, pay down commercial paper or revolving credit, and for general partnership purposes. Settlement is set for July 20.
This is what a sample annual cash-cost bridge looks like:
| Annualized item | Amount | Rate used | Cash effect |
|---|---|---|---|
| Issued 2057 notes | $1.75 billion | 6.64% weighted | $116.3 million cost |
| Series H skipped post-reset | $900 million | 10.00% | $90.0 million saving |
| Short-term debt paid off | Up to $832.5 million | 3.95% | Up to $32.9 million saving |
| Estimated net | — | — | $6.6 million saving |
Based on Friday’s five-year Treasury yield; actual reset will happen later.
Figure assumes all net proceeds before offering costs pay down debt at Energy Transfer’s March 31 weighted average borrowing rate.
If you run it on that counterfactual, annual cash outlays drop by about $6.6 million after the reset. But if you compare the new notes to the Series H issue’s current 6.5% rate before November, annualized cost actually goes up about $24.9 million. Those numbers are minor next to Energy Transfer’s $2.70 billion in distributable cash flow for the first quarter — that’s the DCF, or cash left for payouts and paying down debt after company-defined adjustments.
S&P Global Ratings gave the notes a BB+ rating and said it will treat 50% of the issue as equity in its credit metrics. That’s the hybrid angle: these are legally debt, but count partly as equity for ratings, so they don’t fully hit leverage as Energy Transfer raises long-term funding out to 2057.
Energy Transfer shares were less active than two big pipeline rivals. Enterprise Products Partners LP NYSE:EPD added 1.4%. The Williams Companies Inc NYSE:WMB was up 2.6% since the July 2 close.
| Company | July 2 close | July 10 close | Weekly change |
|---|---|---|---|
| Energy Transfer | $19.33 | $19.66 | up 1.7% |
| Enterprise Products | $36.75 | $37.27 | added 1.4% |
| Williams | $73.14 | $75.02 | rose 2.6% |
Energy prices moved higher for the week, but Energy Transfer didn’t follow crude oil directly. WTI gained almost 4% and Brent was up 5.5%, with Friday’s close at $71.41 and $76.01 a barrel. Traders are watching the Strait of Hormuz and the chance of new U.S.-Iran talks. “This market is ready, willing and able to jump on good news or at least no bad news,” said John Kilduff, partner at Again Capital. Reuters
Energy Transfer is yielding about 6.9% with its $1.35 annualized common-unit distribution at $19.66. That kind of income support ties the stock to rates. When risk-free yields go up, the equity payout doesn’t look as attractive, though skipping the preferred reset can get more appealing.
Focus turns to inflation and rates next week, with U.S. CPI numbers set for Tuesday, PPI Wednesday, and retail sales on Thursday. Federal Reserve Chair Kevin Warsh is slated for his first monetary-policy hearing in Congress. “If we get hotter inflation … it could push odds of a rate increase higher by year end,” said Anthony Saglimbene, chief market strategist at Ameriprise. Reuters
The $6.6 million saving isn’t a forecast. It counts on the five-year Treasury yield staying at 4.306% at the Series H reset, all extra dollars paying down debt, and the 3.95% March borrowing rate holding. If the November Treasury yield drops, cash gets used elsewhere, or Energy Transfer taps lower-rate commercial paper, the saving goes away. Another rate rise could also hurt Energy Transfer’s 6.9% yield valuation.
Energy Transfer isn’t on the earnings calendar next week. The company aims to release Q2 numbers before the bell on Aug. 4, after the expected July 20 settlement of the notes and ahead of the Series H redemption window opening Aug. 15. Investors will get a look at whether the transaction comes off as basic balance-sheet cleanup or if it adds a little to cash coverage.
