MONTREAL -- Two major rating agencies have voiced concerns over the finances of Bombardier Inc., whose future is being questioned as it considers options to raise its more than US$9 billion debt.
S&P Global Ratings changed its outlook to "negative" from "stable" on Friday, following in the footsteps of Moody's Investors Service, which did the same Thursday evening.
The Montreal-based transportation manufacturer's stock dropped another seven per cent to $1.13 in late-afternoon trading after plunging 32 per cent on Thursday.
Bombardier has faced persistent difficulties in its rail division but also raised doubts about its continued participation in the A220, less than two years after having ceded control of the program formerly called C Series to Airbus.
The multinational expects to use US$1.2 billion in cash for the 2019 financial year, up from its prior forecast of US$500 million.
A downgrade in the credit rating generally results in higher borrowing costs.
"As a result, we are less confident that Bombardier will be able to generate positive cash flow (which is used to pay down debt) in 2020 and show improvement in 2021," said S&P Global Ratings.
This report by The Canadian Press was first published Jan. 17, 2020.
