Bombardier was upgraded to B from B- by S&P citing “solid operational and financial execution” that should “support sustainable deleveraging”. Bombardier exceeded its targets for revenue, earnings, free cash flow, and debt repayment through 2022, S&P said. Furthermore, it significantly improved its profitability with cost-efficiency initiatives – operating margins improved markedly from a low-single-digits to over 9% in 2023. The rating agency added that Bombardier is excelling on both, its supply chain front and its strategy of growing higher-margin after-market services segment. S&P expects Bombardier to sustain its earnings momentum with its its debt-to-EBITDA ratio improving to ~6x in 2023 and 5x or less by 2024. This would be more than 1x lower than S&P’s previous expectation. S&P also notes that Bombardier’s guidance for annual free cash flows of over $900mn by 2025 is conservative and could be exceeded.
Bombardier’s bonds were trading slightly higher with its 6% 2028s up 0.3 points to 95.55, yielding 7.11%.