Mounting market concerns of late have pushed credit default swap (CDS) spreads for Bombardier Inc. out to their widest levels in five years, according to Fitch Solutions in its latest CDS Case Study Snapshot.
Five-year CDS on Bombardier have widened 70% over the past month to price at the widest levels seen since 2009. 'CDS widening for Bombardier can likely be attributed to market concerns surrounding larger than expected negative free cash flow and the impact on liquidity, along with an announcement that it is suspending its Learjet program,' said Director Diana Allmendinger.
After pricing consistently in-line with 'B+' levels for much of the past year, the cost of credit protection on Bombardier's debt has now moved wide of 'B-' levels.
Fitch Solutions case studies build on data from its CDS Pricing Service and proprietary quantitative models, including CDS Implied Ratings. These credit risk indicators are designed to provide real-time, market-based views of creditworthiness. As such, they can and often do reflect more short term market views on factors such as currencies, seasonal market effects and short-term technical influences. This is in contrast to Fitch Ratings' Issuer Default Ratings (IDRs), which are based on forward-looking fundamental credit analysis over an extended period of time.
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