TEXT-S&P rates Bombardier proposed snr notes
March 6 - Standard & Poor's Ratings Services today said it assigned its debt issue and recovery ratings to Montreal-based Bombardier Inc.'s (BB+/Stable/--) proposed US$500 million senior unsecured notes due March 15, 2022. We rate the notes at 'BB+' (the same as the corporate credit rating on Bombardier), with a '4' recovery rating, indicating lenders can expect average (30%-50%) recovery in the event of default. The notes and the guarantees are senior unsecured obligations of Bombardier, ranking equally with all existing and future unsecured unsubordinated debt of the company. Proceeds from the proposed US$500 million notes will be used to finance the redemption and retirement at maturity of Bombardier's 6.75% notes due May 1, 2012, and for general corporate purposes. While this issuance will lead to a slight increase in leverage net of retirement of the 2012 notes, we believe the excess proceeds will improve the company's liquidity position. "The ratings on Bombardier reflect our view of the company's leading market positions in the transportation and business aircraft segments, its good cost efficiency, and increasing product range and diversity," said Standard & Poor's credit analyst Jatinder Mall. "These positive factors are partially offset, in our opinion, by the financing pressure Bombardier's customers face in both the aerospace and transportation division, significant execution risk in the launch of its upcoming CSeries jet, increasing leverage, and weakening cushion under the financial covenants," Mr. Mall added. The stable outlook reflects our expectations that the company's credit metrics will not deteriorate further and it will generate stronger cash flows in 2012 than in 2011 as it works to improve the delayed deliveries experienced on the rail transportation side last year. Bombardier is engaged in the manufacture of transport solutions worldwide. It operates in two distinct industries: aerospace and rail transportation and has 69 production and engineering sites in 23 countries, as well as a worldwide network of service centers. RATINGS LIST Bombardier Inc. Corporate credit rating BB+/Stable/-- Rating Assigned Proposed US$500 mil. senior unsecured notes BB+ Recovery rating 4
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