(Recasts offer pricing, investor comment)
Nov 20 (Reuters) - Bombardier Inc sold $1 billion of seven-year bonds, $100 million more than initially expected, underscoring strong demand for the deal partly slated to retire debt maturing in 2019, according to a term sheet seen by the Reuters financial service IFR.
The Canadian plane-and-train-maker is tapping debt markets for a second year in a row. It had launched the bond sale at a final yield of 7.5 percent, the tight end of the 7.5 to 7.75 percent range it had used when marketing the deal, according to investors.
Bombardier plans to use most of the proceeds to retire notes with a coupon of 4.75 percent due in 2019 and the rest for general corporate purposes.
Bombardier spokesman Olivier Marcil declined to comment on specific numbers.
Bombardier agreed in October to sell a majority stake in its CSeries jet program to European planemaker Airbus SE, which is expected to cut costs while bolstering the plane's sales. It would give Bombardier a possible way out of a damaging trade dispute with Boeing Co and U.S. regulators.
As part of the deal, Bombardier has said it would invest $300 million to set up an Alabama assembly line at an existing Airbus facility for CSeries purchased by American carriers.
"We believe some of the remaining proceeds may also be used to fund its new Alabama facility," said research firm CreditSights in a note to clients.
"There is no link to make," Marcil said by email.
One of the investors said it made sense for Bombardier to use the proceeds to bolster its liquidity since the company was paying a higher rate on the issue.
"They have wild swings in working capital so I think there is always an extra need (for cash)," Greg Zappin of Penn Mutual Asset Management said by phone. "If you are going to pay up a bit (to issue new bonds), you might just get the extra liquidity."
In separate notes, rating agencies Moody's and Fitch both raised doubts about Bombardier attaining its goal of being cash flow neutral by 2018. Moody's cited uncertainty from the trade challenge on the company's U.S. CSeries sales.
Bombardier also aims to break even on the CSeries in 2020.
In November 2016, Bombardier raised $1.4 billion by offering senior notes to refinance some of its debt.
(1 Canadian dollar = $0.7828) (Reporting by Allison Lampert in Montreal and Davide Scigliuzzo at IFR in New York; Editing by Bernadette Baum and Richard Chang)