RE:RE:RE:RE:RE:Moody's rationaleHey Temp. Thanks for your well thought out post.
I just got in. I'm calling time out for tonight.
I've read the Moody criteria for their methodoligy per Rating. I will go through your post comments tomorrow. GN
lb1temporary wrote: You're right with your numbers; we will be there in 2024. Fine.
But getting an Investment grade is not limited to this ratio. For example, I followed Air Canada very closely in 2016-2020 period and the management goal was to reach the BBB rating; their threshold was a 1:1 debt \EBITDA ratio. As THE National airline in a vast country, Air Canada was able to offer an acceptable stability asked by the investment grade rating but the ratio asked was 1;1. (Before the COVID pandemy with the grounding of airplanes).
Look at the Flamingogold post and click on the methodology link. The explanations fill 10 pages and don't read it with a ''check list'' or a Yes or NO minding. It 's all judment. And it's for the whole aerospace and Defense industries; many with exclusive products and long term contracts with the US Government.
On an other side, yes its technically possible to have an investment grade debt but only with a relatively small debt. The problem would then be a financial waste of money. Low debt means high equity. The return on equity ratio could be too weak to be interesting for investors and your share will not fly high enough. Too low leverage. Each industry has his best financial efficient way to be managed.
Is a 2B$ share offering to reimburse the Bombardier's debt would be a good move for having a better rating (a BB)? Will Moody' be satisfied with only this kind of move?
A balanced approach is better.
For my part the best rating for Bombardier is B+ or BB-. Enough debt to have a leverage but not too much to be viable in the low part of the cycle.
Again each opinion is a valid one.