January 10, 2013 / 3:05 PM / 5 years ago

TEXT - S&P rates Bombardier snr unsecured notes BB

Jan 10 - 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$2 billion aggregate amount of senior unsecured notes.
These obligations comprise two tranches, the breakdown of the amount in each yet
to be determined. We rate the notes 'BB' (the same as the corporate credit
rating on Bombardier), with a recovery rating of '4', which corresponds with
average (30%-50%) recovery in our default scenario. We note, however, that
following the US$2 billion debt issuance the recovery on Bombardier's senior
unsecured debt falls to the low-end of the range for the '4' recovery rating.

The new notes will be senior unsecured obligations of Bombardier, ranking 
equally with all other unsecured and unsubordinated indebtedness. 

We understand that net proceeds will be used for general corporate purposes.

Although the proposed debt issuance will result in somewhat weaker debt 
leverage, with an adjusted gross debt-to-EBITDA ratio expected to be about 7x 
at year-end 2013, the company will benefit from US$2 billion in additional 
liquidity. We continue to view Bombardier's current liquidity position, with a 
US$2.1 billion cash balance at Sept. 30, 2012, as adequate, and we believe the 
debt issuance will provide more cushion if capital expenditures were to 
increase due to delays in the CSeries programs.

The ratings on Bombardier reflect what we view as the company's satisfactory 
business risk profile and aggressive financial risk profile 

"Our ratings on Bombardier take into consideration 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 Ronald Charbon. 

"These positive factors are partially offset, in our opinion, by the financing 
pressure Bombardier's customers face in the aerospace and transportation 
divisions, significant execution risk in the launch of the company's upcoming 
CSeries jet, increasing leverage, and weakening cushion under the financial 
covenants," Mr. Charbon added.

Bombardier is engaged in the manufacture of transport solutions worldwide. It 
operates in two distinct industries: aerospace and rail transportation. It has 
69 production and engineering sites in 23 countries, and a worldwide network 
of service centers.

     -- Criteria - Corporates - Industrials: Key Credit Factors: Methodology 
And Assumptions On Risks In The Aerospace And Defense Industries, June 24, 2009
     -- 2008 Corporate Criteria: Analytical Methodology, April 15, 2008

Bombardier Inc. 
Corporate credit rating  BB/Stable/--

Rating Assigned
US$2 billion senior unsecured notes   BB
Recovery rating                       4
0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below