Boeing Co (NYSE:BA) is set to embark on a bond sale, aiming to raise $10 billion amid challenges like a recent quarterly loss and Moody’s credit rating downgrade. 

Moody’s downgrade, which leaves Boeing’s credit rating just a step above junk, underscores the company’s current financial strain. 

S&P rated them BBB- and Moody’s rated them Baa3. The issuance consists of maturities ranging from three to 40 years, with the longer-term bonds carrying a yield of 2.25 percentage points higher than Treasuries, significantly lower than initial estimates.

Boeing’s Chief Financial Officer, Brian West, stressed the company’s commitment to safeguarding its investment-grade rating, Bloomberg highlighted.

With access to $10 billion in untapped credit lines and focused on prudently managing its balance sheet, Boeing remains determined to prioritize its financial stability.

Related: Boeing’s 737 Saga Dents Q1 Bottomline, CEO Emphasizes Improving Quality & Safety.

The warm investor reception the deal is getting “may say more about strong demand for new issuance than the prospects for Boeing credit,” Bloomberg noted, citing a portfolio manager at Brandywine Global Investment Management.

Despite the challenges, analysts like Matthew Geudtner from Bloomberg Intelligence believe Boeing possesses the necessary tools to defend its investment-grade status. 

The negative outlook from credit rating agencies gives Boeing at least 12 months to demonstrate progress in streamlining operations and adhering to FAA production regulations.

Financial institutions, including Citigroup Inc., Bank of America Corp., JPMorgan Chase & Co., and Wells Fargo & Co., are managing the bond deal. 

Reuters noted that investors and analysts suggest Boeing may issue bonds to address over $12 billion in debt due in 2025 and 2026. 

Moody’s noted Boeing’s resilient business profile offsets the struggles in commercial aircraft, which are expected to persist until 2026. 

Bond proceeds will enhance Boeing’s liquidity before existing debt matures, including $4.3 billion due in 2025, Reuters added.

Sources indicate strong demand for the bonds, with subscriptions reportedly eight times oversubscribed.

Price Action: BA shares are up 3.37% at $172.86 at the last check Monday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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