Praxair Inc. (PX) recently issued $500 million of 4.05% notes due on March 15, 2021. The offering closed on March 4, 2011.
Praxair intends to use the proceeds to repay its short-term debt, repurchase shares under its share buyback program, and also for general corporate purposes. The funds may also be invested in short-term investments before being utilized for the above mentioned purposes.
Currently, the company’s long-term debt is rated A2 by Moody’s Investors Service and A by Standard and Poor’s, a division of The McGraw-Hill Companies. Exiting the fiscal year 2010, Praxair’s long-term debt was $5,155 million, up 8.4% year over year.
Praxair is one of the leading companies engaged in the production and distribution of industrial gases, primarily catering to demands in North America, South America, Europe, and Asia. We believe Praxair stands well positioned to grow in the quarters ahead as is evident from the company’s promising EPS guidance of $5.25-$5.40, with mid-point up 12.3% year over year and the revenue growth expectation of $11 billion.
The growth prospects of industrial gas producers are very bright going forward, with demand for gases expected to rise manifold due to their wide application areas. Industrial gases are being widely used by the chemical processing and petroleum refining, metal production and fabricating, and electronics and health care industries. Demands for industrial gases are also increasing in the emerging economies.
However, the highly-competitive environment as well as extreme dependence on energy costs can be causes of concern. Prime competitors of the company include Air Products & Chemicals Inc. (APD) and L’Air Liquide SA.
We currently maintain a Neutral recommendation on the stock.
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