Bombardier Inc. T.BBD.A

The debt reorganisation job

[Tempo1]

Surprinsingly, they want to push the term of another slice of debt only two months after the last move.

To be clear, they want to reimburse 540 M$ of 2 year term debt. This will be financed by a new 8 years (2032)  500 M$ bond and 40 M$ from working capital. Maybe more if, as usual, the market response allow them to increase the new issuance.

I understand that they want to clear the 2 B$ debt balloon of 2026, 2027 as fast as they can.

Given the current bonds rates, the new issuance rate will be over 8%.

[DrInvestor]

Thanks Tempo. Why would they do this so soon again, this is strange. 

[Tempo1]

Their decision.  I tought that they would wait for better rates but they only object to the term. The plan is clearly to have 750 M$ term each year. Easily managable. They are willing to pay 8% till 2032. It could be an indication that they don't plan to pay Investment grade level rates; they are confortable with the B+ or BB- level of rates.  

[Shamhorish]

YES,  WHY  would they are rushing into such an offer while general interest rate is expected to go down later this year  and being will to pay higher interest,, does not smell good!

[flamingogold]

Take it easy. Trust in the plan. Perhaps they are working to "clear the short-term debt runway" to achieve an A-rating credit upgrade (almost there now). That would open many, many doors for them and after the share price spike, perhaps they do a stock split or they capital raise? Whatever the plan is, I trust that this team is doing the right thing and one day we will look back and say

[PabloLafortune]

Its not smart to do this now. Interest rates will come down. Why? Bcause govts cant keep running ever increasing deficits. They need to pay lower rates, and they need to replace fiscal stimulus (deficits) with monetary stimulus (lower rates). Also high rates puts real estate market in jeopardy. Inflation in the bigger picture doesnt matter.

[DrInvestor]

What on earth were they thinking? There must be something that we don't understand here. Can someone rationalize this?

[MyNameIsNobody]

I'm also surprised they're doing rhis now, with everyone and their moms expecting rates to drop bit by bit, but I'm sure they thought of this too. My take is that they will somehow negotiate a buyback option without much penalties, like they did in one of the last debt buybacks. (Can't remember which one was bought back a little bit under par value) Can't wait to see what the

[MyNameIsNobody]

Lol..numbers came out while I was writing my previous posting.  They did manage to get a good deal, the debt is being massaged and coddled into something the market will appreciate. Great job from Bart Demosky.. again!

[bicente]

They are making the moves that they can ... remember that they are setting up around the world and some funds are needed for these moves , sometimes minor changes make a big difference... I would have been worried if they were not saving any  money  ..GLTA

[MyNameIsNobody]

I'm with you on this, everything is being optimized. This move will be saving them 4.36M$ of interest each year.(if my calculations are correct) Every small number count ans they add up...

[Shamhorish]

could this move intiate (with time) an upgrade from rating agencies?

[MyNameIsNobody]

Yes, it could and will, but I'm not expecting any upgrade in the next few months unless Bombardier has a few more moves like this one. 

[BBDB859]

I think the picture is getting a bit clearer. They will have $750M left for the 2027, right through till 2032. Easy math. That's $750M X 6 years (2027-2032) = $4.5B They're paying off the 2026 totally. And they are reducing the 2027 to $750M. So they will now pay off, from 2024 till 2025 another $1B as they said. So that's $5.5 -$1B = $4.5B. In 2026 they start paying off 2027 and