The leading advisers on rolls-royces deeply discounted 2bn rights issue radically scaled back their underwriting commitments to the aero-engine makers cash call on concerns about the pandemic and market volatility in the run-up to the us election.

Goldman sachs and morgan stanley, two of the top banks advising the board on the 5bn debt and equity fundraising unveiled on thursday, cut their exposure by up to half late last week, several sources said.

The timing of the rights issue was not ideal, said one person close to the situation, alluding to president donald trumps recent refusal to commit to a peaceful transfer of power if he loses the us presidential election. it's clearly a major risk if this guy [president donald trump] is going to go mad.

The outlook for aviation and in particular the long-haul market served by rolls-royce had deteriorated in recent months. its clear no one is going to fly long-haul for three to four years, he added.

Rolls-royce, along with the rest of the aerospace sector, has suffered a collapse in revenues and a substantial outflow of cash because of a virtual shutdown in global aviation as a result of the pandemic.

The banks, together with house broker jefferies, had pledged to underwrite 60 per cent of the 6.4bn new shares to be issued in the 10-for-three cash call. the total is now closer to 30 per cent, two sources said.

However, rolls-royce is still guaranteed to raise the funds after bnp paribas, hsbc and citi, all involved in the 3bn debt package also announced on thursday, stepped in to join as lead underwriters to make up the shortfall.

Rolls-royce said: we are very happy with the support we have received from a strong consortium of banks for our debt funding and fully underwritten rights issue.

Bnp, which has ambitious plans to become the dominant force in european investment banking, has leapfrogged goldman sachs to become the largest underwriter with about 20 per cent of the underwriting, sources said.

The underwriters stand to earn up to 55m in fees, out of total estimated cost for the rights issue of 80m. morgan stanley, goldman sachs and bnp declined to comment.

In addition to the rights issue, in which new shares will be priced at 32p each, rolls-royce announced plans for a bond issue of at least 1bn, a new two-year term loan facility of 1bn, and agreement in principle from the uk export finance agency to guarantee a further 1bn loan on top of 2bn granted in july. the rights issue must be approved by shareholders later this month.

About 3.2bn of the companys existing debt falls due next year, which has put it under pressure to refinance.

Warren east, chief executive, said the measures represented a comprehensive package which will take the liquidity question off the table during this crisis. this is a final step to fixing the damage done to the balance sheet.

Investors welcomed the debt and equity combination, saying it was the right structure to get rolls-royce through an extended downturn.

Nevertheless, some were discomfited by the timing of the cash call, with the shares having fallen 84 per cent since february. they closed down 10 per cent to 116.8p on thursday compared with just under 7 in mid-february.

They should have done [the recapitalisation] either much earlier or much later, said one leading long-term investor. i am disappointed with the timing. still, the investor remained confident in the groups business model in the medium term and would be supporting the rights issue, he said.

Bankers said the delay had increased the pricing discount on the shares, as the process would now drag through the volatile us election period.

Another leading shareholder said the steep fall in the shares in recent months meant there was now a gap between the value of rolls-royces non aerospace divisions and market perception, even after the fundraising. he also intends to take up his rights.

Mr east defended the timing of the cash call. we could have launched a rights issue back in april, he told the financial times. but the discussion was we cannot go directly to shareholders; we need to show some self help. i couldnt turn up with a bunch of powerpoints saying we are going to restructure.

The group had moved quickly to conserve cash, raising billions in extra liquidity in the depth of the crisis and taking steps to deliver 1.3bn in cost savings by mid-2021 through 9,000 job cuts to shrink its civil aerospace business by a third.

Credit agencies, which downgraded rolls-royce debt to junk earlier this year, welcomed the fundraising but warned it was still a long way from returning to investment grade.

Martin hallmark, a senior vice-president and lead analyst for rolls-royce at moodys, said there were still downside risks around future cash flows including its delivery of cost-savings and the evolution of market recovery, [which] mean liquidity headroom remains uncertain.