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The share price of CSL Ltd (ASX: CSL) is showing notable gains today, with shares of the biotech company in the S&P/ASX 200 Index (ASX:XJO) trading at AU$285.49 in on Wednesday, marking a 1.07% increase from yesterday's closing price of AU$282.47. In contrast, the ASX 200 remains relatively stable during the same period.
Investor interest in CSL may have been piqued by the company's recent announcement regarding the issuance of two long-dated bonds, amounting to US$1.25 billion (AU$1.91 billion).
CSL's share price responds positively to refinancing news
According to the announcement, these corporate bonds will be issued by CSL Finance Plc and backed by guarantees from CSL Limited, the parent company, and some of its subsidiaries.
The details of the bonds include:
- US$500 million, 10-year bond with a fixed rate coupon of 5.106%
- US$750 million, 30-year bond with a fixed rate coupon of 5.417%
The news of this refinancing initiative may be contributing to the upward momentum in CSL's share price, as the company plans to utilize a portion of the AU$1.9 billion raised to refinance existing bank debt with higher interest rates. CSL's management has indicated that the remaining funds will be allocated for general corporate purposes.
The settlement of the bond issuance is anticipated to take place on Wednesday, 3 April, subject to customary closing conditions.
Recent developments in CSL's performance
CSL released its half-year results on 13 February, revealing some notable achievements. These included an 11% year-on-year increase in revenue (in constant currency terms) to US$8.05 billion and a 20% rise in net profit after tax in constant currency, reaching US$1.94 billion.
Despite these strong financial indicators, CSL's share price experienced a 2.8% decline on the day of the results announcement. Investors may have expressed concerns regarding the 32% year-on-year surge in net finance costs, totaling US$234 million. This increase was primarily attributed to debt incurred from CSL's acquisition of Vifor Pharma, coupled with higher interest rates.
Nevertheless, CSL's balance sheet remains robust, boasting net assets valued at US$19.16 billion. This stability provides investors with confidence in the company's financial position moving forward.
