Poitin
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RE: Eads Considering 4 Bln Euro Bond Issue To Fund XWB

Thu Nov 30, 2006 3:25 am

Should be interesting to see if this is a public offering or "private". And if public, what the bond rating will be in light of the A380 issues.
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EddieDude
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RE: Eads Considering 4 Bln Euro Bond Issue To Fund XWB

Thu Nov 30, 2006 3:47 am

"EADS wants guarantees from the governments of Germany, France, Spain and the UK that they will acquire 30-40 pct of the bond issue."

Seems that a portion will be a private placement, the acquirors of which would be the aforementioned governments, while the portion corresponding to the remainder of the issuance could be either a public offering or a private placement with institutional investors only.
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bringiton
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RE: Eads Considering 4 Bln Euro Bond Issue To Fund XWB

Thu Nov 30, 2006 3:52 am

I think Airbus is wanting the govts. to commit to about 40% while the others are available in the open market? Werent there talks of some Arab buyers interested ? I also wouldnt be surprised if China took some aswell !!
 
Poitin
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RE: Eads Considering 4 Bln Euro Bond Issue To Fund XWB

Thu Nov 30, 2006 3:58 am

Quoting EddieDude (Reply 2):
"EADS wants guarantees from the governments of Germany, France, Spain and the UK that they will acquire 30-40 pct of the bond issue."

True, and is that any different from "launch aid?"

That should cause a stir in Washington (both DC and state).
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PolymerPlane
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RE: Eads Considering 4 Bln Euro Bond Issue To Fund XWB

Thu Nov 30, 2006 4:34 am

Quoting Poitin (Reply 4):
Quoting EddieDude (Reply 2):
"EADS wants guarantees from the governments of Germany, France, Spain and the UK that they will acquire 30-40 pct of the bond issue."

True, and is that any different from "launch aid?"

That should cause a stir in Washington (both DC and state).

It depends on the rate and repayment plan. If it is a market rate and mechanism, I am sure it's not really launch aid.

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PP
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zvezda
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RE: Eads Considering 4 Bln Euro Bond Issue To Fund XWB

Thu Nov 30, 2006 4:49 am

EADS are hoping for the governments to buy some of the bonds because it would bid up the price. Let us hope that the governments have the wisdom to insist that the bonds be bought only by private investors.
 
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Stitch
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RE: Eads Considering 4 Bln Euro Bond Issue To Fund XWB

Thu Nov 30, 2006 5:43 am

Quoting Zvezda (Reply 6):
EADS are hoping for the governments to buy some of the bonds because it would bid up the price.

And EADS might also be hoping the governments will be more...loose...on repayment terms (in other words, they expect full repayment, but will accept being behind the non-governmental investors) which I imagine will improve the willingness of those investors to invest and help keep the interest rate a bit lower.

All that being said, I don't expect Airbus to have to pay penurious interest rates, even with the damage their bottom line is going to be taking over the next four years. EADS strikes me as still a "safe bet", just as Boeing was back in the mid to late 1990s.
 
zvezda
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RE: Eads Considering 4 Bln Euro Bond Issue To Fund XWB

Thu Nov 30, 2006 5:52 am

Quoting Stitch (Reply 7):
I don't expect Airbus to have to pay penurious interest rates, even with the damage their bottom line is going to be taking over the next four years. EADS strikes me as still a "safe bet", just as Boeing was back in the mid to late 1990s.

Last I checked, EADS bond rating was still above junk.
 
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Stitch
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RE: Eads Considering 4 Bln Euro Bond Issue To Fund XWB

Thu Nov 30, 2006 5:55 am

Quoting Zvezda (Reply 8):
Last I checked, EADS bond rating was still above junk.

And so it should be, frankly.
 
Poitin
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RE: Eads Considering 4 Bln Euro Bond Issue To Fund XWB

Thu Nov 30, 2006 7:25 am

Quoting PolymerPlane (Reply 5):
It depends on the rate and repayment plan. If it is a market rate and mechanism, I am sure it's not really launch aid.

"Launch aid" is in the eyes of the beholder, and I suspect both Boeing and the US government will have blood in their eyes.

Quoting Zvezda (Reply 6):
EADS are hoping for the governments to buy some of the bonds because it would bid up the price. Let us hope that the governments have the wisdom to insist that the bonds be bought only by private investors.

Yes, I agree with you completely, yet somehow, I just don't think it will happen. "Too many jobs on the line."

Quoting Zvezda (Reply 8):
Last I checked, EADS bond rating was still above junk.

But sinking

http://www.channelnewsasia.com/stori...orld_business/print/236712/1/.html
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zvezda
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RE: Eads Considering 4 Bln Euro Bond Issue To Fund XWB

Thu Nov 30, 2006 8:15 am

Quoting Poitin (Reply 10):
But sinking

EADS' sinking credit rating is an ineluctible result of the WhaleJet fiasco. Getting the A350 right is imperative.
 
gbfra
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RE: Eads Considering 4 Bln Euro Bond Issue To Fund XWB

Thu Nov 30, 2006 9:53 am

Governments can borrow at a lower rate than EADS. Therefore buying EADS bonds appears to be quite promising for them without spending taxpayers' money.

The credit ratings of EADS are not superb but they're not very bad either.

So you shouldn't exaggerate.
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glacote
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RE: Eads Considering 4 Bln Euro Bond Issue To Fund XWB

Thu Nov 30, 2006 12:54 pm

1) Of course EADS credit rating is still above junk bonds (!).
2) Repayable loans are not launch aids nor free money like export tax breaks.
3) However they have one slight market impact - in that in the case of a defaults governments bonds usually are less senior (either explicitely or implicitely). This means in practice that private lenders should expect the loss to exceed 30% of the notional before themselves incurring their first dollar loss. This is a significant "credit enhancement".
4) Conditionnally repayable launch aid can be a huge strategic advantage in smaller markets. IT makes it possible to force all competitors to invest as heavily as you did (read: full CFRP Y3 + new engines) while you yourself still enjoy the allowance of loosing up to one third of your investment for free. This may (or not) incitate your competitors [em]not[/em] to enter that market until they themselves get better return-on-capital ratios.
5) It looks like France is the cause of the delay of the board which was suppose to greenlight the launch. Apparently the french government wants "more details" on the financing - like it would care about having confidence to get its money back in due time...
 
PolymerPlane
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RE: Eads Considering 4 Bln Euro Bond Issue To Fund XWB

Thu Nov 30, 2006 1:09 pm

Quoting Glacote (Reply 13):
2) Repayable loans are not launch aids nor free money like export tax breaks.

It is cheaper money however.

Quoting Glacote (Reply 13):
3) However they have one slight market impact - in that in the case of a defaults governments bonds usually are less senior (either explicitely or implicitely). This means in practice that private lenders should expect the loss to exceed 30% of the notional before themselves incurring their first dollar loss. This is a significant "credit enhancement".

Not that slight. It reduces the risk of investing significantly from the private firm point of view. It could tilt the balance from not investing to investing, and thus the interest rate on the private bond issued.

Cheers,
PP
One day there will be 100% polymer plane

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