UPDATE 1-Bombardier debt ratings pressured after it cuts forecasts
(Adds news of Moody's review; updates market reaction)
By Allison Martell
TORONTO Jan 16 (Reuters) - Bombardier Inc's debt ratings have taken a hit after the planemaker suspended work on its newest Learjet and warned 2014 results would be weaker than forecast, with three major ratings agencies changing their stance on the manufacturer.
Shares of Bombardier, which is pushing to bring its new CSeries jet into service in the second half of this year, fell 5.5 percent to C$2.90 on the Toronto Stock Exchange on Friday afternoon after dropping nearly 20 percent on Thursday.
S&P cut Bombardier's long-term corporate credit rating to B+ from BB- late on Thursday, and said its outlook was negative, in part because of the Canadian company's reduced profitability and pricing pressure on new aircraft. It said a tough market and big capital expenditures could weigh on performance again in 2015.
"Furthermore, the outlook incorporates our opinion that, given Bombardier's current leverage and debt-to-cash flow metrics, there remains very limited room for delays on project execution or margin deterioration," the agency said in its report.
Fitch changed its outlook to negative and said the new forecasts and the $1.4 billion charge associated with the Learjet suspension heightened concerns about Bombardier's cash flow and liquidity.
Moody's said it placed Bombardier's ratings under review for possible downgrade, because it expects that the company will need to raise more debt to fund a cash shortfall and improve liquidity, boosting its already high leverage.
Bombardier declined to comment on the reports. Continued...