BA Boeing Co

By Doug Cameron and Andrew Tangel 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (May 1, 2020).

Boeing Co. launched Thursday a $25 billion bond offering that it said met near-term financial requirements and for now avoided any federal funding to ride out the coronavirus crisis that has engulfed the global airline industry.

The seven-part offering, which includes bonds that won't be redeemed until 2060, was oversubscribed and attracted better pricing than might have been expected for a company with Boeing's credit rating and challenges, said one banker briefed on the deal.

The deal, expected to close May 4, would be one of the largest-ever corporate-bond offerings. It comes just a day after Boeing reported a second consecutive quarterly loss and had its credit rating downgraded to a notch above junk status.

Boeing has been hobbled by uncertainty over its liquidity as airlines canceled orders and its 737 MAX jet remained grounded after two fatal crashes, and the huge fundraising will ease some investor concerns.

"We do not plan to seek additional funding through the capital markets or the U.S. government options at this time," Boeing said in a statement.

The offering carried pricing and concessions more akin to the top end of high-yield issuers, said analysts at CreditSights. S&P Global on Wednesday downgraded Boeing to BBB-, a notch above speculative grade.

S&P Global said the deal was the sixth-largest corporate offering, and the biggest not attached to an M&A transaction. The deal was earlier reported by Reuters.

Boeing ended the March quarter with $15.5 billion in cash and equivalents, with analysts estimating it required between $12 billion and $20 billion more this year to ride out the loss of revenue from delayed aircraft sales, pay suppliers and fund existing debt.

The company had already drawn down a $13.8 billion term loan this year and saved more than $8 billion in funding needs by suspending its dividend and dropping a planned deal with Brazil's Embraer SA.

Boeing ended the quarter with $38.9 billion in debt, with the new issue pushing it far higher and potentially above the top end of the $50 billion estimates from some credit-rating firms.

Boeing last tapped the U.S. bond market in July 2019 with a $5.5 billion issue aimed at financing the now-terminated Embraer deal, with proceeds used for general corporate purposes. The company still has $9.6 billion in undrawn revolving loans after expanding those facilities last year.

Executives at the plane maker have said they were weighing whether to tap government aid under a $2 trillion stimulus package enacted in March, but have declined to say how much taxpayer help -- and what type -- the company might need.

Boeing Chief Executive David Calhoun said this week the stimulus package had begun to help credit markets thaw. "We expect that programs coming out of the bill and funding options the government is putting in place will provide support to help the credit markets function again, providing the liquidity that is vital to our industry's ability to bridge recovery," Mr. Calhoun said in an investor call on Wednesday.

The company's shares, one of the few gainers on the Dow Jones Industrial Average Index on Thursday, dipped in after-hours trade, recently down 2%.

Write to Doug Cameron at doug.cameron@wsj.com and Andrew Tangel at Andrew.Tangel@wsj.com

(END) Dow Jones Newswires

May 01, 2020 02:47 ET (06:47 GMT)

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