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Praxair (PX) Issues $750 Million Notes, Shares Fall 1.7%

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Industrial gas producer and supplier Praxair Inc.PX recently priced $750 million of notes issuance. The new offering triggered concerns over the company's already mounting debt levels, leading to a 1.73% fall in its share price on Sep 22.

As disclosed, Praxair offered two varieties of notes. The first was $300 million of 2.25% notes due 2020, at a discounted price of 99.906% of principal amount. Interest will be paid semi-annually on Mar 24 and Sep 24, starting from Mar 24, 2016.

Secondly, Praxair offered $450 million of notes due 2026 at 99.584% of principal amount. These notes carry a coupon rate of 3.20%, with semi-annual interest payable on Jan 30 and Jul 30. The first interest will be paid on Jan 30, 2016.

Praxair highlighted the fact that these notes are being offered under its shelf-registration statement filed with the U.S. Securities and Exchange Commission. The offering will consummate on Sep 24, 2015. Net proceeds from the issuance will be used to repay debt and fund general corporate purposes.

Nevertheless, though such debt issuances satisfy general corporate purposes, we believe it makes Praxair more levered toward debt. Exiting second-quarter 2015, the company had long-term debt of approximately $8.8 billion; while its debt-to-capital ratio was 62.5% compared with 54.5% in the year-ago quarter. If unchecked, higher debt levels will increase the company's financial obligations and subsequently hurt its profitability.

With a market capitalization of $29.6 billion, Praxair currently carries a Zacks Rank #4 (Sell). Better-ranked stocks in the chemical diversified industry include Koppers Holdings Inc. KOP , Air Products & Chemicals Inc. APD and Celanese Corporation CE . While Koppers Holdings sports a Zacks Rank #1 (Strong Buy), both Air Products & Chemicals and Celanese Corporation carry a Zacks Rank #2 (Buy).

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PRAXAIR INC (PX): Free Stock Analysis Report

AIR PRODS & CHE (APD): Free Stock Analysis Report

CELANESE CP-A (CE): Free Stock Analysis Report

KOPPERS HOLDNGS (KOP): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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