CUMMINS INCCMI
CUMMINS INC Debt Disclosure
NOTE 12. DEBT
Loans Payable
Loans payable at December 31, 2025 and 2024 were $313 million and $356 million, respectively, and consisted primarily of loans payable to financial institutions. The weighted-average interest rate of loans payable at December 31 was as follows:
| 2025 | 2024 | |||||||||||||
| Weighted-average interest rate | 2.55 | % | 2.85 | % | ||||||||||
Commercial Paper
Our committed credit facilities provide access up to $4.0 billion of unsecured, short-term promissory notes (commercial paper) pursuant to the Board authorized commercial paper programs. These programs facilitate the private placement of unsecured short-term debt through third-party brokers. We intend to use the net proceeds from the commercial paper borrowings for general corporate purposes. We had $353 million and $1.3 billion in outstanding borrowings under our commercial paper programs at December 31, 2025 and 2024, respectively. The weighted-average interest rate for commercial paper at December 31 was as follows:
| 2025 | 2024 | |||||||||||||
| Weighted-average interest rate | 3.20 | % | 4.49 | % | ||||||||||
Revolving Credit Facilities
On June 2, 2025, we entered into an amended and restated 5-year credit agreement that allows us to borrow up to $2.0 billion of unsecured funds at any time prior to June 2, 2030. The credit agreement amended and restated the prior $2.0 billion 5-year credit agreement that would have matured on June 3, 2029. We also entered into a new 3-year credit agreement that allows us to borrow up to $2.0 billion of unsecured funds at any time prior to June 2, 2028. The credit agreement replaced the prior $2.0 billion 364-day credit facility that matured on June 2, 2025.
Our committed credit facilities provide access up to $4.0 billion from our $2.0 billion 3-year credit facility and our $2.0 billion 5-year facility. We intend to maintain credit facilities at the current or higher aggregate amounts by renewing or replacing these facilities at or before expiration. Amounts payable under our revolving credit facility rank pro rata with all of our unsecured, unsubordinated indebtedness. Up to $300 million under each committed credit facility is available for swingline loans. Based on our current long-term debt ratings, the applicable margin on Secured Overnight Financing Rate () rate loans for the 3-year facility was 0.75 percent per annum and 0.75 percent for the 5-year facility. Advances under the facility may be prepaid without premium or penalty, subject to customary breakage costs. These revolving credit facilities are maintained primarily to provide backup liquidity for our commercial paper borrowings and general corporate purposes. Our credit agreements include various covenants, including, among others, maintaining a net debt to total capital ratio of no more than 0.65 to 1.0. At December 31, 2025, we were in compliance with the financial debt covenants. There were no outstanding borrowings under these facilities at December 31, 2025 and December 31, 2024.
The total combined borrowing capacity under the revolving credit facilities and commercial programs should not exceed $4.0 billion. At December 31, 2025, our $353 million of commercial paper outstanding effectively reduced the $4.0 billion available capacity under our revolving credit facilities to $3.6 billion.
At December 31, 2025, we also had an additional $798 million available for borrowings under our uncommitted international and other domestic credit facilities.
Long-term Debt
A summary of long-term debt was as follows:
| December 31, | ||||||||||||||||||||
| In millions | Interest Rate | 2025 | 2024 | |||||||||||||||||
| Long-term debt | ||||||||||||||||||||
| Hydrogenics promissory notes, due 2025 | —% | $ | — | $ | 110 | |||||||||||||||
Senior notes, due 2025 (1) | 0.75% | — | 500 | |||||||||||||||||
| Debentures, due 2027 | 6.75% | 58 | 58 | |||||||||||||||||
| Debentures, due 2028 | 7.125% | 250 | 250 | |||||||||||||||||
| Senior notes, due 2028 | 4.25% | 300 | — | |||||||||||||||||
| Senior notes, due 2029 | 4.90% | 500 | 500 | |||||||||||||||||
Senior notes, due 2030 (1) | 1.50% | 850 | 850 | |||||||||||||||||
| Senior notes, due 2031 | 4.70% | 700 | — | |||||||||||||||||
| Senior notes, due 2034 | 5.15% | 750 | 750 | |||||||||||||||||
| Senior notes, due 2035 | 5.30% | 1,000 | — | |||||||||||||||||
| Senior notes, due 2043 | 4.875% | 500 | 500 | |||||||||||||||||
| Senior notes, due 2050 | 2.60% | 650 | 650 | |||||||||||||||||
| Senior notes, due 2054 | 5.45% | 1,000 | 1,000 | |||||||||||||||||
Debentures, due 2098 (2) | 5.65% | 165 | 165 | |||||||||||||||||
| Other debt | 175 | 160 | ||||||||||||||||||
| Unamortized discount and deferred issuance costs | (91) | (89) | ||||||||||||||||||
| Fair value adjustments due to hedge on indebtedness | (57) | (85) | ||||||||||||||||||
| Finance leases | 136 | 125 | ||||||||||||||||||
| Total long-term debt | 6,886 | 5,444 | ||||||||||||||||||
Less: Current maturities of long-term debt (3) | 94 | 660 | ||||||||||||||||||
| Long-term debt | $ | 6,792 | $ | 4,784 | ||||||||||||||||
(1) In 2021, we entered into a series of interest rate swaps to effectively convert debt from a fixed rate to floating rate. In March of 2025, we settled the remainder of the interest rate swaps on our debt due in 2025. See "Interest Rate Risk" in NOTE 20, "DERIVATIVES," for additional information. During the third quarter of 2025, we repaid the outstanding balance of the senior notes due in 2025. | ||||||||||||||||||||
(2) The effective interest rate is 7.48 percent. | ||||||||||||||||||||
(3) The weighted-average interest rates for the years ended December 31, 2025 and 2024, were 5.19 percent and 1.01 percent, respectively. | ||||||||||||||||||||
On May 9, 2025, we issued $2.0 billion aggregate principal amount of senior unsecured notes consisting of $300 million aggregate principal amount of 4.25 percent senior unsecured notes due in 2028, $700 million aggregate principal amount of 4.70 percent senior unsecured notes due in 2031 and $1.0 billion aggregate principal amount of 5.30 percent senior unsecured notes due in 2035. Net of the discount and underwriter fees, we received net proceeds of $1.99 billion. The senior unsecured notes due in 2028 and 2035 pay interest semi-annually on May 9 and November 9, commencing on November 9, 2025. The senior unsecured notes due in 2031 pay interest semi-annually on February 15 and August 15, commencing on February 15, 2026. The indenture governing the senior unsecured notes contains covenants that, among other matters, limit (i) our ability to consolidate or merge into, or sell, assign, convey, lease, transfer or otherwise dispose of all or substantially all of our and our subsidiaries' assets to another person, (ii) our and certain of our subsidiaries' ability to create or assume liens and (iii) our and certain of our subsidiaries' ability to engage in sale and leaseback transactions.
Principal payments required on long-term debt during the next five years are as follows:
| In millions | 2026 | 2027 | 2028 | 2029 | 2030 | |||||||||||||||||||||||||||
| Principal payments | $ | 94 | $ | 130 | $ | 608 | $ | 539 | $ | 863 | ||||||||||||||||||||||
The $250 million 7.125 percent debentures and $165 million 5.65 percent debentures are unsecured and are not subject to any sinking fund requirements. We can redeem these debentures at any time prior to maturity at the greater of par plus accrued interest or an amount designed to ensure that the debenture holders are not penalized by the early redemption.
Our debt agreements contain several restrictive covenants. The most restrictive of these covenants applies to our revolving credit facility which will upon default, among other things, limit our ability to incur additional debt or issue preferred stock, enter into sale-leaseback transactions, sell or create liens on our assets, make investments and merge or consolidate with any other entity. At December 31, 2025, we were in compliance with all of the financial debt covenants under our borrowing agreements.
Shelf Registration
As a well-known seasoned issuer, we filed an automatic shelf registration for an undetermined amount of debt and equity securities with the SEC on February 13, 2025. Under this shelf registration we may offer, from time-to-time, debt securities, common stock, preferred and preference stock, depositary shares, warrants, stock purchase contracts and stock purchase units.
Interest Expense
For the years ended December 31, 2025, 2024 and 2023, total interest incurred was $360 million, $387 million and $383 million, respectively, and interest capitalized was $31 million, $17 million and $8 million, respectively.
Interest Rate Risk
In December 2025, we entered into a series of interest rate swaps to effectively convert $150 million of our senior notes, due in 2054, from a fixed rate of 5.45 percent to a floating rate equal to the daily United States Dollar Secured Overnight Financing Rate (USD SOFR) plus a spread through February 2041. See NOTE 20, “DERIVATIVES,” for additional information.
Fair Value of Debt
Based on borrowing rates currently available to us for bank loans with similar terms and average maturities, considering our risk premium, the fair values and carrying values of total debt, including current maturities, were as follows:
| December 31, | ||||||||||||||
| In millions | 2025 | 2024 | ||||||||||||
Fair values of total debt (1) | $ | 7,337 | $ | 6,651 | ||||||||||
| Carrying value of total debt | 7,552 | 7,059 | ||||||||||||
(1) The fair value of debt is derived from Level 2 input measures. | ||||||||||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 10, 2026 | Showing above |
| 2024 | Feb 11, 2025 | |
| 2023 | Feb 12, 2024 | |
| 2022 | Feb 14, 2023 | |
| 2021 | Feb 8, 2022 | |
| 2020 | Feb 10, 2021 | |
| 2019 | Feb 11, 2020 | |
| 2018 | Feb 11, 2019 | |
| 2017 | Feb 14, 2018 | |
| 2016 | Feb 13, 2017 | |
| 2015 | Feb 12, 2016 | |
About Debt Disclosures
Debt disclosures detail a company's borrowing structure — the types of instruments, interest rates, maturity schedule, and covenant restrictions that define its financial obligations and flexibility. This section is essential for assessing refinancing risk, interest rate exposure, and the margin of safety against financial distress.
Key signals: the maturity schedule reveals concentration risk — large maturities within 1-2 years during tight credit markets can force dilutive refinancing or asset sales. Compare the fair value of debt against carrying amount to gauge whether the market views the company's credit risk differently than the balance sheet suggests. Watch covenant compliance disclosures for tightening cushions, especially leverage and interest coverage ratios. Variable-rate debt exposure quantifies sensitivity to interest rate changes. Secured versus unsecured mix affects recovery rates and future borrowing capacity. Compare net debt-to-EBITDA against industry peers and covenant limits to assess financial health.