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Bombardier Sells Additional Bonds to Counter Covenant Breach Challenge
May 19, 2021
Planemaker Bombardier sold an additional $260mn of its 7.45% 2034s to an unidentified party, who as per Bloomberg, owns a majority of its $510mn 2034s. Bloomberg reported that this additional sale of bonds is a move to make it difficult for creditors to trigger a default after a holder of its 2034s in a letter argued that sale of assets like transportation, regional jet and aerostructures breached certain covenants. Bombardier has been seeking an amendment of terms on eight bonds since the bondholder’s letter. Bombardier needs approval of more than 50% of each of its USD bondholders for the amendment. “The new investor is acting as a white knight here… It does look like that the new majority investor giving consent should address possible default claims”, Covenant Review analyst Alexander Diaz-Matos said.
Most of Bombardier’s bonds were unchanged but its 7.875% 2027s were down 1.2 to 100, yielding 7.9%.
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