Boeing scores $10 billion bond financing in 'much-needed' liquidity boost

By Joy Wiltermuth

Fresh off reporting a more than $300 million quarterly loss, Boeing Co. saw robust demand on Monday for its $10 billion corporate-bond deal.

Order books peaked at $77 billion, allowing pricing to narrow from initial levels, according to Informa Global Markets. A scarcity factor for the three- to 40-year bonds helped, with it being slightly more than three years since Boeing last borrowed in the U.S. corporate-debt market.

The aircraft manufacturer's new funds represent a "much-needed" liquidity boost that "should keep cash at healthy levels this year and into early 2025," according to Matt Woodruff and Arda Tirnakli, aerospace and defense analysts at CreditSights.

The duo estimated the financing will increase Boeing's (BA) interest burden by about $660 million, with that burden "now total[ing] about $2.8 trillion on a proforma basis."

With safety concerns weighing on Boeing, investors have been getting a chance to own the company's bonds at some their highest yields of 2024, according to BondCliQ - with pegged yields in a range of 6% to nearly 7%.

Boeing's new 10-year bonds on Monday priced at a 6.528% coupon, according to Informa.

Boeing declined to discuss the financing, but a spokesperson pointed to comments last week from Chief Financial Officer Brian West during the company's earnings call.

"We're committed to managing the balance sheet in a prudent manner with two main objectives," West said. "One, prioritize the investment-grade rating; and two, allow the factory and supply chain to stabilize for a stronger trajectory as we exit this year."

Boeing shares were 3.2% higher on Monday, but are still more than 33% lower on the year, as the company faces scrutiny over the safety of its 737 Max series.

-Joy Wiltermuth

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04-29-24 1516ET

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