) or "TI," the largest manufacturer of analog semiconductor
products, has recently announced the pricing of senior unsecured
notes aggregating $1 billion. These bonds have been issued in two
tranches of same amounts but with varying coupon rates and
maturities. The offering is expected to close on May 8, 2013,
subject to customary closing conditions.
The first and second tranches of $500 million each, carrying a
coupon rate of 1.00% and 2.25%, are due to mature in 2018 and
J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC,
Citigroup Global Markets Inc., and Mizuho Securities USA Inc.
will be acting as joint book-running managers for the offering.
Texas Instruments stated that the transaction proceeds would be
used for the repayment of its outstanding debt.
TI remains one of the best-positioned analog companies, given
its compelling product line, the increased differentiation in its
business and lower-cost 300mm capacity. In the recently reported
first quarter, the company spent $232 million on cash dividends
and used $679 million to repurchase its common stock.
At quarter-end, TI had $4.2 billion in long-term debt and $1.5
billion in short-term debt on its balance sheet. During the
quarter, the net debt position moved up slightly.The issuance of
these notes will increase the company's total debt to $6.7
billion from $5.7 billion, taking the debt-to-total
capitalization ratio to 37.9%.
We believe that Texas Instruments has a strong balance sheet,
which will help the company to capitalize on investment
opportunities and make strategic acquisitions, further improving
its growth prospects. We believe the senior notes offering will
bring down its cost of capital, thus strengthening the company's
balance sheet and supporting its future growth.
Currently, TI has a Zacks Rank #2 (Buy), while most of its
peers have a Zacks Rank #3 (Hold). Other stocks in the sector
that are performing well currently are
). While Applied carries a Zacks Rank #1 (Strong Buy), Fiserv and
STMicroelectronics carry a Zacks Rank #2 (Buy).
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