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Praxair to Raise $700M via Notes

Zacks Equity Research

Industrial gas producer and supplier, Praxair Inc. (PX) opted for raising funds yet again, from the market through issuance of notes worth $700 million on November 2, 2012. This is the company’s third fund raising program from the market till date in year 2012.

The current notes issuance will be given effect through the issuing of $400 million of 1.05% notes due in 2017 and $300 million of 3.55% notes due in 2042, expected to yield 1.058% and 3.584% on maturity, respectively. The offer price for 1.05% notes has been fixed at 99.961% of principal amount while at 99.378% for 3.55% notes.

Interest on these notes will be paid semi-annually with the first payment falling due on May 7, 2013. Issuance is expected to be complete by November 7, 2012. Praxair intends to use the proceeds from the issuance for repaying short-term debt, repurchase of shares and for general corporate purposes.

World’s renowned credit rating agency, Standard & Poor's Ratings Services provided its ‘A’ rating to Praxair’s unsecured notes issuance, implying a stable outlook.

Share of the company touched a new 52-week high of $110.14, on November 2, 2012, and end gaining 1.1% over the previous day’s close.

Prior to this issue, Praxair had raised funds in February and August, 2012, through issuance of $600 million of 2.45% note due in 2022 and $500 million of 2.20% notes due in 2022, respectively.

The current Zacks Consensus Estimate for the fourth quarter of 2012 is $1.39, representing a year-over-year increase of 1.9%. Estimates for years 2012 and 2013 are $5.58 and $6.24, reflecting annual growth of 2.9% and 11.8%, respectively.

We maintain a Neutral recommendation on Praxair. The stock also carries a Zacks #3 Rank, implying a short-term (1-3 months) Hold rating while the company’s prime competitor Air Products & Chemicals Inc. (APD) bears a Zacks #4 (Sell) rating.

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