COVID: Boeing issues $25bn of unsecured notes | News | Airfinance Journal

COVID: Boeing issues $25bn of unsecured notes

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Boeing is pushing ahead with a $25 billion bond offering to shore up liquidity after reporting a negative operating cash flow of $4.3 billion in the first quarter due to the impact of the 737 Max grounding and Covid-19.

The deal will price on 4 May. 

Joint bookrunning managers on the deal include Citigroup, Bank of America Securities, JP Morgan and Wells Fargo Securities, according to a regulatory filing.

“We expect negative operating cash flows in future quarters until deliveries resume and ramp up, and we will need to obtain additional financing in order to fund our operations and obligations,” said Boeing.

“Due to uncertainty related to Covid-19 and its impact on us and the aerospace industry, and the volatility in the capital markets generally, access to credit markets may be reduced and we may have difficulty obtaining financing on terms acceptable to us or at all. In addition, certain of our customers may also be unable to make timely payments to us. We are currently considering a range of options to provide us with additional liquidity, such as additional issuances of public debt and/or various forms of debt supported by the US Treasury Department or Federal Reserve System.”

The Chicago-based OEM reported cash and short-term investments of $15.5 billion at the end of the first quarter.

Fitch Ratings has assigned a BBB rating to the senior unsecured notes. The notes will be issued in multiple parts with maturities ranging from 2022 to 2060.

Proceeds will be used for general corporate purposes, which Fitch expects will include paying down commercial paper balances and debt maturities.

The OEM has already fully drawn on a nearly $14 billion term loan. Fitch noted that Boeing's debt nearly doubled in 2019 to around $27 billion, while debt rose to $38.9 billion at the end of the first quarter after Boeing drew down its delayed draw term loan.

“Debt will continue to rise with today's debt issuance,” Fitch added.

Fitch estimated that year-end 2020 debt could be approximately $45 billion after the company reduces commercial paper balances and meets debt maturities. If debt is higher than $45 billion, Fitch expects it to be offset by higher cash balances. Fitch expects Boeing to prioritise debt repayment from 2021.

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Regional Snapshot

Related Data

Transaction Snapshot
Air Company | Bond issue | 01-24 | $1.5bn
Financial Close:
11/02/2024
SPV:
Some Aviation Trust
Value:
$1,500.00m USD
Full Details