DOW Raises $2B in Debt - Analyst Blog
November 11 2011 - 8:00AM
Zacks
The Dow Chemical
Company (DOW) sold $2 billion in new 10 and 30 year bonds.
The 10 year bond for $1.25 billion is due in 2021 and is priced at
2.15 percentage points over comparable government debt to yield
4.174%. However, the 30 year bond for $750 million is due in 2041
and is priced at 2.20 percentage points over Treasurys to yield
5.259%.
The net proceeds will be used for
general corporate purposes, including fund pension contributions,
finance capital expenditures and working capital, and to pursue
growth initiatives, whether through acquisitions, joint ventures or
otherwise.
As of September 30, 2011, cash and
cash equivalent amounted to $2,206 million versus $7,039 million at
the end of December 31, 2010. Net debt-to-capital was 40.9% versus
41.6% in the prior quarter.
Recently, DOW earned 69 cents per
share in the third quarter of 2011, ahead of the Zacks Consensus
Estimate of 64 cents per share as well as last year’s 45 cents per
share. However, including one-time charges, the company earned 62
cents per share compared with 54 cents per share in the year-ago
quarter.
Quarterly revenues jumped 17% year
over year to $15.1 billion and were above the Zacks Consensus
Estimate of $14.7 billion, driven by double-digit gains in all
operating segments and geographic areas, with the largest growth in
Latin America (21%) and Europe, Middle East and Africa (EMEA)
(19%). In the emerging geographies, sales reached $5 billion, a new
quarterly record for the company.
Dow anticipates demand to improve
further, especially in Asia with the global economic recovery. The
US and European markets have also started showing signs of
improvement. Dow is also optimistic on major consumer-markets,
including electronics, coatings, automotive and packaging. However,
construction markets are expected to remain weak.
DOW faces stiff competition from
EI DuPont de Nemours & Co. (DD).
Currently, DOW has a short-term (1
to 3 months) Zacks #3 Rank (Hold) but a long- term Neutral
recommendation.
DU PONT (EI) DE (DD): Free Stock Analysis Report
DOW CHEMICAL (DOW): Free Stock Analysis Report
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