Bombardier closes $1 billion offering

Bombardier Biggin Hill

Bombardier has closed an offering of $1,000,000,000 senior notes due 1 December 2024.

The notes are being sold on par at a coupon rate of 7.50% per year. The proceeds from the offering will be used to finance a previous tender offer of $600 million due 2019, and remaining funds will be used for general corporate purposes.

It has also issued a notice of redemption for the outstanding $600 million. The price of the redemption will be disclosed on 20 December 2017.

This is the second year running that Bombardier has closed debt offerings.

Confidence in Bombardier’s cash flow has taken a downturn. Bond rating firm Moody’s downgraded its corporate family rating from B2 to B3 last week, doubting whether Bombardier will have a neutral cash flow by 2018.

Going forward

Following the sale of the C Series, focus is turning towards its business jet programmes. Launching the Global 7000 remains top priority for Bombardier Business Jets, demonstrated recently by a hiring call for 1,000 workers in the Montreal area to finalise the interior of the aircraft.

The aircraft is expected to enter service in the second half of 2018, with the initial deadline being pushed back two years in 2015. When the Global 7000 enters the certification process, the company will turn focus to launching the Global 8000.

Bombardier is also planning to invest $300 million in the C Series to establish an assembly line in Alabama.