RE:RE:RE:RE:RE:Moody's rationaleHey Temp.It's Saturday and i've got a few things to attend here. So I'll just keep it as brief as possible. There may be many explanations, that need more expansion or elaboration. But the meat of the discussion will be suffecient for yours & my benefit.
You're when you say that each opinion is, a valid one here. YOU ARE RIGHT. Because neither opinion is either right or wrong. It's just someones opinion I've looked at the Technical Methodology of Moody's for the Baa3 rating which is similar to the BBB used by some other Agency's. That Baa3 Rating is on the LOW end of their Investment grade Rating criteria (Thanks for that btw). Which if fine.
I'm with you when it comes to what Rating the Bomber should try ATTAIN as a company.
I'm sorry I have no idea what AC was doing. I only invested in Aeronautical stocks with Boeing, before I bought Bombardier. So I just can't comment on the AC plight.
The point is we're in agreement that LTD should exist for a Company, for many reasons such as Tax, and strategical liquidity reasons. That Debt point for the Bomer should be at $3B LTD max for us, IMHO.We won't get there till 2025/6 at the earliest, given their financial position, which we both know well. So this LTD
threshhold criteria in Moody's Baa3 weighted Rating, is 35% of the value of the Investment grade title. We'll can be at 3X Ratio easily, fairly soon as u well know. If the company choses? I don't know what the company's plans are for the total LTD amount? They haven't told us. It's the Law of Diminishing returns here in MO on the LTD. I like some LTD.
The other Crieria are easier.
On Scale metrics we're there already. We have the scale just on the Revs expected this year of $6.9B. Based on this, we have another 20% of the weighted Ratio. We already have 50% of the Baa3 Rating requirements with the 2 of their metrics criteria.
On the
Business profile side we're almost there. Because the Revs are steady. Yet to be rated as stable, and our competitive position in regards to our pears hasn't totally been established yet. Wait till Pearson kicks in, in 2024, to see whether we're first or second to Gulfstream. This Business Profile criteria is 20% weighted. I'd say we'll know where we are in 2025 here, for this portion of the Baa3 rating.
This criteria is the toughest one for me. Because GD, or Gulfstream is our neck and neck competitor, and they have cash. This where our Management strength will earn it's stripes.
Finally. Financial Policy is
the only arbitrary criteria of their metrics Profile. This will depend on what they consider risky, financially stable, based on many assessments from Moody's. This portion of the metrics is weighted at 20%. I would think that they would have a threshhold of about 65% to 70% minimum of where the Metrics being achieved by a company will be, when they assign the Baa3 rating. So we're not that far from Investment grade. This is Just MHO of course.
My conclusion is that if we'll get close to that position by 2025??? Then the Tutes will line up for the Shares, and that's when we'll see the first 3 to 1 FORWARD SPLIT. I hope they do a second, even when the float gets to 300M shares after the first split.
I know this analysis of mine is preliminary and a bit optomistic. But we'll get there. I have confidence in Management and the market for BJ's is holding well. It's just a matter of, the passage of time, for the procurement of this part of the plan. YMMV.
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.