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A Double Barrel Of Bad News

26 September 2017 by lberuti

BOMB’s ( Bombardier, Inc ) turnaround plan is coming under threat from stepped-up challenges to the company’s cutting-edge jetliner and to its rail business. The US government is set to decide next week whether to impose tariffs on BOMB’s C Series aircraft after a complaint from BA ( Boeing Co ). A preliminary ruling is expected on the 5th October as to whether they have sold their C Series at artificially low prices which would subject them to duties on planes they sold to US airlines. Separately, SIEGR’s ( Siemens AG ) railway business was reported this morning to potentially be merging with ALOFP (Alstom SA) after months of talks with BOMB. Losing out on a SIEGR deal would weaken BOMB’s rail unit, its biggest business, while an adverse ruling in the US would hamper demand for its priciest jetliner. This has led investors to push BOMB’s 5-year risk premium steadily wider since the September roll. In a week it has moved 102bps wider to 448bps, where it seemed to have found a clearing level as 2-way flow eventually developed today.