Praxair Raises Funds, Prices Notes Issuance - Analyst Blog

Praxair Inc. (PX), a leading industrial gas producer and supplier, recently announced the pricing of €500 million worth notes issuance. Offered under the company's universal shelf registration statement filed with the U.S. Securities and Exchange Commission, the notes have been offered at 99.134% of the principal amount.

As disclosed, the notes carry a coupon rate of 1.625%, with interest to be paid annually on Dec 1 each year. The first interest payment will be made on Dec 1, 2015. Also, these notes, maturing on Dec 1, 2025, are expected to yield 1.712% on maturity.

Praxair anticipates consummating the offering by Dec 1, 2014. Net proceeds, net of underwriting fees but before expenses, are projected to total €493.4 million. The company intends to use these funds for repayment of debt or buying back shares under the company's existing share repurchase authorization.

Praxair's notes issuance has been rated ‘A2 (Stable)' by Moody's Investors Service and ‘A (Stable)' by Standard & Poor's.

In Mar 2014, Praxair had issued €600 million worth of notes due Mar 11, 2020. The notes, carrying a coupon rate of 1.5% per annum, are expected to yield 1.589% on maturity.

Even though such debt issuances satisfy general corporate purposes, it has made Praxair more levered towards debt. The company's debt-to-capital ratio was 55.7% at the end of third-quarter 2014 as against 54.5% in the previous quarter. Escalating debt levels, if unchecked, might prove to be detrimental for the company's profitability.

With a market capitalization of $38 billion, Praxair currently carries a Zacks Rank #4 (Sell). Some better-ranked stocks in the industry include Innospec Inc. (IOSP), Valhi, Inc. (VHI) and Celanese Corporation (CE). While both Innospec and Valhi, Inc. sport a Zacks Rank #1 (Strong Buy), Celanese Corporation holds a Zacks Rank #2 (Buy).

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