Caisse investment does not impact Bombardier ratings: Moody’s

The Caisse de dépôt et placement du Québec‘s US$1.5 billion investment in Bombardier Inc‘s rail business this week has “no impact on the company’s ratings at this time,” Moody’s Investors Service said. While the deal is “another shot in the arm for Bombardier”, it imposes incremental financial leverage, the rating agency said. On the other hand, combined cash infusions from the Caisse and the Québec government have helped “to mitigate further downward rating pressure.”

PRESS RELEASE

Moody’s says CDPQ investment in Bombardier Transportation does not impact ratings

New York, November 19, 2015 — Bombardier Inc.’s announcement that the Caisse de dépôt et placement du Québec (“CDPQ”) has taken a 30% equity stake in Bombardier Transportation (“BT”) for $1.5 billion of 9.5% convertible preferred stock has no impact on the company’s ratings at this time.

“The CDPQ investment is another shot in the arm for Bombardier following last month’s investment by the Quebec government, further bolstering liquidity and with the dividend expected to be paid in-kind,” said Russell Solomon, Senior Vice President and Moody’s lead analyst for the company. “Ultimately, though, the transaction imposes incremental financial leverage by way of earnings leakage and prospective if not likely take-out of the investment with a higher amount of debt, adversely impacting what is already an over-leveraged balance sheet,” Solomon added.

Both transactions had already been incorporated into Moody’s analysis underlying the current Bombardier ratings and had served to mitigate further downward rating pressure, according to the rating agency.

Headquartered in Montreal, Quebec, Canada, Bombardier is a global diversified manufacturer of business and commercial jets as well as rail transportation equipment. Annual revenues total roughly $20 billion.

For further details research subscribers are directed to the associated issuer comment dated November 19, 2015 and other related research for Bombardier as posted on www. Moodys.com.

This publication does not announce a credit rating action. For any credit ratings referenced in this publication, please see the ratings tab on the issuer/entity page on www.moodys.com for the most updated credit rating action information and rating history.

Russell Solomon
Senior Vice President
Corporate Finance Group
Moody’s Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Donald S. Carter, CFA
MD – Corporate Finance
Corporate Finance Group
(416) 214-1635

Releasing Office:
Moody’s Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Photo courtesy of Shutterstock