LONDON (AFX) - Moody's Investors Service said it raised its ratings outlook for aerospace company Bombardier Inc to stable from negative due to its continued financial improvement, and affirmed the Ba2 ratings.
The company's cash flow coverage improved in financial year 2007, but remains weak for the Ba2 rating, Moody's said.
A negative rating action will be given if Bombardier's interim finance portfolio increases rapidly, creating a significant use of cash or if the outlook for continued improvement in cash flow and operating margins were to weaken, Moody's said.
Negative action is also likely if the retained cash flow to debt were to decline meaningfully below 10 pct or if the EBIT to interest were to fall below 1.3 times.
A positive outlook will be considered when the uncertainties of the regional jet sector diminish, debt coverage metrics improve, and liquidity remains at adequate levels, Moody's said.
The large increase in backlog for Bombardier, now at 40 bln usd, up from 31 bln usd at the end of financial year 2006, provides an underpinning for future growth and improved operating results, Moody's added.
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