Moody“s Investors Service, the US credit-rating agency, assigned an A3 rating to the US$ 250 million senior unsecured debentures of the US company, Praxair Inc. In addition, Moody“s affirmed the com…
Moody“s Investors Service, the US credit-rating agency, assigned an A3 rating to the US$ 250 million senior unsecured debentures of the US company, Praxair Inc. In addition, Moody“s affirmed the company“s A3 long-term debt ratings and its Prime-2 rating for commercial paper. The A3 ratings reflect Praxair“s leading technological and market positions in industrial gases, large and stable cash flow generation and Moody“s positive outlook for the industrial gases industry. Praxair is the world“s third largest supplier of industrial gases, the largest supplier in the Americas and a leading supplier in Southern Europe. Praxair“s exposure to South America accounts for nearly 14% of the company“s sales and adds modest volatility to earnings and cash flow. The company has successfully hedged its exposure in Brazil during the most recent devaluation and in prior periods of hyper-inflation. Praxair“s financial performance in 2000 was adversely impacted by increases in energy prices and fuel costs. However, the company has instituted surcharges to restore margins in 2001. A slowdown in the US economy 2001, may have a modest negative impact on top line growth, but if the company can implement preemptory surcharges to cover increases in energy costs during the summer months, financial performance should improve due to higher capacity utilisation rates and cost reduction efforts. The industrial gas industry is characterized by relatively high barriers to entry, high transportation costs, a diverse customer base, long-term take-or -pay contracts and greater pricing flexibility. These characteristics limit aggressive competition and provide a stable base of earnings and cash flow, allowing gas companies to maintain higher debt levels and lower coverage ratios than many other industrial companies. Headquartered in Danbury, Connecticut, Praxair is a leading producer of industrial gases. Praxair reported revenue of US$ 5 billion in fiscal 2000.