Is the CSL (ASX: CSL) share price a buy after the healthcare giant announced new debt to strengthen its debt maturity profile.
What is CSL?
It was founded in the late 1900s as the Commonwealth Serum Laboratories, CSL was sold by the Australian Government to Australian investors via the share market in 1994 at $2.30 per share, at which time it doubled its size through an international acquisition. CSL also split its shares 1-for-3. Meaning, the first investors’ true price was closer to just $0.77 each.
Nowadays, CSL is a global leader in blood plasma vaccines (think: the flu) and antivenoms, providing relief for potentially life-threatening medical conditions.
What did CSL announced today?
The company said that it has priced a new US$750 million placement.
It’s broken up into four parts. Part one is US$100 million for seven years with an interest rate of 2.38%. Part two is US$300 million for 10 years with an interest rate of 2.65%. Part three is US$750 million for 12 years with an interest rate of 2.73%. Part four is US$200 million for 15 years with an interest rate of 2.83%.
This new placement has a weighted average interest rate of 2.68% and an average life of 11.5 years.
The new money will be used for “general corporate purposes”.
CSL Chief Financial Officer David Lamont said: “We were very pleased with the outcome of the debt raising, which was well-oversubscribed by investors. The US Private Placement market continues to provide CSL with good flexibility in terms of maturities and we are grateful for the ongoing support of this important debt market. The transaction is a continuation of the Company’s strategy to strengthen its debt maturity profile.”
Is the CSL share price a buy?
CSL is certainly one of the highest quality large blue chips on the ASX. But at a share price above $300 I’m not sure it looks great value to buy considering all of the uncertainty due to COVID-19. There may be better opportunities.
I’m a big of technology shares like these ones which could keep growing nicely:
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Disclosure: at the time of publishing, Jaz does not have a financial interest in any of the companies mentioned.
