News
Boeing has Received About $77 Billion in Orders for its First Bond Sale
(CTN News) – Boeing Co. has received over $77 billion in orders for its first bond offering since the planemaker revealed a quarterly loss and $3.9 billion in cash burn, and Moody’s Ratings downgraded the company’s credit rating to just above junk.
According to someone familiar with the situation who cannot talk publicly, the corporation is raising $10 billion with maturities ranging from three to forty years. According to the individual, the 40-year part will return 2.25 percentage points more than Treasuries, up from earlier projections of roughly 2.65 percentage points.
The deal’s positive investor reception “may say more about strong demand for new issuance than the prospects for Boeing credit,” said Bill Zox, a Brandywine Global Investment Management portfolio manager.
Moody’s also rates the company’s outlook as negative, and all three graders now rank Boeing as a notch above high yield.
On a conference call last week, Boeing Chief Financial Officer Brian West stated that he expects to protect the business’s investment-grade rating and that the company still has $10 billion in unused credit lines. He noted that Boeing is closely monitoring its cash flow and believes it still has “significant market access” if it needs to boost liquidity.
According to the individual, Citigroup Inc., Bank of America Corp., JPMorgan Chase & Co., and Wells Fargo & Co. oversee the bond deal. Citi, BofA, and Wells Fargo declined to comment, and JPMorgan did not respond to a request for comment.
A Boeing representative declined to comment, instead referring Bloomberg to statements made by the company’s CFO on a recent earnings call. West stated that Boeing is committed to managing its balance sheet ” prudently” to preserve its investment grade rating.
Bloomberg Intelligence analyst Matthew Geudtner wrote in a note Monday that Boeing has the tools to defend its investment-grade status. The rating agencies’ negative outlooks give the company at least 12 months to demonstrate progress in normalizing operations and moving toward the FAA production limit.
