Fitch Places Bombardier's Ratings on Rating Watch Negative.NEW YORK New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of -- Fitch Ratings Fitch Ratings An international rating agency for financial institutions, insurance companies, and corporate, sovereign, and municipal debt. Fitch Ratings has headquarters in New York and London and is wholly owned by FIMALAC of Paris. has placed the debt and Issuer Default Ratings (IDR IDR In currencies, this is the abbreviation for the Indonesian Rupiah. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. ) for both Bombardier Inc. (BI) and Bombardier Capital Inc. (BC) on Rating Watch Negative. The existing ratings are listed below: Bombardier Inc. --IDR 'BB'; --Senior unsecured debt Unsecured debt Debt that does not identify specific assets that the debtholder is entitled to in case of default. 'BB'; --Bank facilities 'BB'; --Preferred stock 'B+'. Bombardier Capital Inc. --IDR 'BB'; --Senior unsecured debt 'BB'. These ratings cover approximately $4.2 billion of outstanding debt and preferred stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. . Due to the existence of a support agreement and demonstrated support by the parent, BC's ratings are linked to those of BI. The Rating Watch is based on concerns about potential changes in Bombardier's financial strategy, which has been focused on debt reduction. The tender offer announced earlier today indicates that the company will retire little debt over the next two fiscal years. In addition, Fitch is concerned that some or all of the debt reduction accomplished in the current fiscal year (nearly $1 billion) could be offset by new debt issuance. The company intends to fund the tender with a portion of an upcoming bond issue. The Rating Watch will be resolved when it becomes clear what amount of debt Bombardier plans to issue in the near term, and Fitch expects to resolve the Rating Watch within the next several weeks. Fitch believes that any downgrade will most likely be limited to one notch. Factors supporting the ratings include the company's cash position, diversification, large backlog at Bombardier Transportation (BT), leading market positions, the health of the business jet and turboprop turboprop: see turbine. turboprop Hybrid engine that provides jet thrust and also drives a propeller. It is similar to the turbojet except that an added turbine, behind the combustion chamber, works through a shaft and speed-reducing gears to turn a markets, and BT's successful restructuring. Concerns include the variability of free cash flow due to order flow at BT and Bombardier Aerospace (BA); continued low margins and free cash flow; business jet market cyclicality; the sizable pension plan deficit; the impact of exchange rate volatility on financial results and planning; and various RJ concerns, including low backlog, weak orders, uncertainty regarding development of new aircraft models, the future of the 50-seat RJ segment, and contingent obligations related to past aircraft sales. Fitch's rating definitions and the terms of use Terms of Use are rules set up by the owner of an intellectual property or service to govern how they may be legally used. In many cases, terms of service are used as a contractual agreement between a company and users of a service they provide. of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures Policies and Procedures are a set of documents that describe an organization's policies for operation and the procedures necessary to fulfill the policies. They are often initiated because of some external requirement, such as environmental compliance or other governmental are also available from the 'Code of Conduct' section of this site. |
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