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LyondellBasell (LYB) Announces Pricing of Guaranteed Notes

Zacks Equity Research

LyondellBasell Industries N.V.’s LYB fully-owned subsidiary, LYB International Finance III, LLC, has priced a public offering of $1 billion total principal amount of 4.2% guaranteed notes due 2049.

The company expects the offering to close on Oct 10, 2019, which is subject to the fulfilment of customary closing conditions. The notes are unconditionally and fully guaranteed by LyondellBasell.

The company is expected to employ the net proceeds from the offering to repay a portion of the outstanding indebtedness under its 364-day $2,000-million senior unsecured term loan facility.

Shares of LyondellBasell have gained 5.2% year to date against the industry’s decline of 21.4%.

In August, the company stated that it anticipates low-cost natural gas liquid feedstocks to continue driving strong chain margin in the Olefins & Polyolefins Americas unit as well as Oxyfuels and Related Products business. The company intends to initiate operations in the Hyperzone HDPE plant during the second half of 2019.

LyondellBasell's HDPE project is expected to boost capacity and drive earnings. The facility will have an annual capacity of 1.1 billion pounds. The company is also constructing a world scale plant on the U.S. Gulf Coast for producing propylene oxide (PO) and tertiary butyl alcohol (TBA). The plant will have annual capacity of 1 billion pounds of PO as well as 2.2 billion pounds of TBA and its derivatives.

The buyout of A. Schulman will also generate significant cost synergies. The integration is progressing well and at the end of second-quarter 2019, the company captured cost synergies at an annual rate of around $100 million.

Zacks Rank & Key Picks

LyondellBasell currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the basic materials space are Kinross Gold Corporation KGC, Agnico Eagle Mines Limited AEM and Arconic Inc ARNC, all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Kinross has an expected earnings growth rate of 160% for 2019. The company’s shares have surged 88.5% in the past year.

Agnico Eagle has projected earnings growth rate of 157.1% for the current year. The company’s shares have rallied 69.4% in a year’s time.

Arconic has an estimated earnings growth rate of 50% for the current year. Its shares have moved up 19.5% in the past year.

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