It has been awhile since I’ve posted the progression of the Bombardier debt yield curve, but clearly things have stabilized at the investment grade quality level:
The corporation itself has also raised half a billion (US$) in an equity offering, and has warrants outstanding to purchase shares of its class B stock which are now well within the money. This will be another CAD$500 million that will go to their treasury when it is exercised. Solvency-wise, the company looks like it is once again on stable footing now that the liabilities associated with the C-Series jet has been dumped off to Airbus.
I will likely discontinue my Divestor coverage of Bombardier after this post. The story is over. A few years ago, people were selling down their preferred shares to ridiculously high yields (22%) on the premise that they were not going to be able to stay solvent while they financed their C-Series jet. This was a classic time to capitalize on the cascade of emotional negative sentiment towards the corporation. I even got a media mention for this.
I’m still holding onto my Bombardier preferred shares, although strictly from a valuation perspective, I would not be buying them at the existing price. However, due to the unrealized capital gain and the fact that I have nothing else better to invest my cash with, I will be holding my holdings indefinitely.