Boeing bonds are still coveted by investors despite a rough 2024 for jet maker

By Claudia Assis and Joy Wiltermuth

The aerospace giant's bonds are seeing more buyers than sellers since trouble erupted in January

Investors may have soured on Boeing Co.'s stock, but not on the aerospace and defense company's bonds, which on Wednesday were seeing a wave of buying activity from Wall Street investors.

So far in 2024, Boeing's (BA) bonds have seen about $209 million more in buying from customers than sales, according to data from BondCliQ.

The buying in Boeing debt comes as spreads - the extra compensation investors earn on bonds above a risk-free benchmark - have generally increased by about 15 basis points in the past week, according to BondCliQ data.

That had Boeing's shorter-dated bonds maturing in 2027 at roughly a 5.4% yield, while those due in 2060 were closer to a 6.4% yield. Those levels compared with a roughly 5.35% yield for the broader U.S. investment-grade corporate-bond market.

Boeing has faced a slew of quality problems and snags in recent months, including the high-profile midair blowout of a panel on an Alaska Airlines jet in early January, which has led to heightened scrutiny from aviation authorities.

The company on Tuesday reported February deliveries that put the jet maker further behind last year's sales pace and did little to ease worries about its first-quarter sales.

Southwest Airlines Co. (LUV), which exclusively flies Boeing 737s, said in a filing Tuesday that Boeing has told it to expect only 46 Max jets to be delivered this year, from a previous expectation of 79 Max planes.

Given the reduced expected deliveries for 2024, CreditSights analysts said they see several quarters ahead where Boeing could end up operating below its $10 billion minimum cash balance.

That potentially could trigger credit-rating downgrades, the analysts said, but still keep the company in the BBB credit-ratings bracket, or a few steps above the junk-bond category.

Boeing is in talks to buy supplier Spirit AeroSystems Holdings Inc. (SPR) as it seeks to improve quality controls. Spirit AeroSystems makes fuselages and other jet components for Boeing, which in 2005 sold the assets that became Spirit AeroSystems.

Boeing's stock has lost 10% in the last 12 months, and 30% so far this year. That contrasts with an advance of 23% and 8%, respectively, for the S&P 500 index SPX over those same periods.

-Claudia Assis -Joy Wiltermuth

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03-13-24 1800ET

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