Bombardier’s bond yield curve has gone much more favourable over the past couple months. Their March 2018 bond issue (the nearest maturity) is trading at par (coupon is 7.5%), while going out to January 2023 the yield to maturity is trading just north of 10%.
(Update on April 18, 2016: After rumours of Delta Airlines close to purchasing C-Series jets and the rejection of the Canadian government’s bailout offer, the yield curve has compressed even further – the January 2023 yield to maturity is now at a bid of 9.5% – the rejection of the bailout offer has to be a positive signal for the company, i.e. they have the financial wherewithal to go on their own without further equity injections).
So while the company isn’t completely out of the woods yet, the market is giving them an opportunity to refinance debt if they choose to do so – However, it is unlikely a bond offering will be made until 2017.
On the preferred share component of their capital structure, their BBD.PR.B series (floating rate) is trading a shade under 10% eligible dividend yield, while the BBD.PR.C series is at 12.7% – somewhat reflecting an increased relative risk of dividend suspension, coupled with a conversion risk (as the company has the right to redeem for equity at the greater of $2/share or 95% of VWAP).
Also muddling the market news is the proposed federal government investment in Bombardier which would likely cement its ability to maintain its credit rating and dividend-paying ability of its preferred shares.
I continue to remain long on the preferred shares.