Boeing Co raised $25 billion in a bond offering on Thursday, a blowout result for the planemaker, which it said helped the company avoid taking government aid during the coronavirus-induced travel downturn.
) raised $25 billion in a bond offering on Thursday, a blowout result for the planemaker, which it said helped the company avoid taking government aid during the coronavirus-induced travel downturn.
The U.S. central bank has slashed interest rates to zero and rolled out around $2 trillion in lending commitments. While it has not yet snapped up any corporate bonds such as Boeing’s, its openness to doing so has buoyed credit markets. Demand was stoked by high yields relative to Boeing’s other bond issues, Boeing’s earnings report on Wednesday and provisions in the offering that protect investors in case of a credit rating downgrade to junk status.
“We will continue to assess our liquidity position as the health crisis and our dynamic business environment evolve,” the company added.Credit ratings agency Moody’s Investors Service Inc estimated this month that Boeing’s funding needs could top $30 billion in 2020. The company secured about half of this by drawing down on a $13.8 billion credit line in March, Moody’s said.
Given the higher yields on offer, there was around $75 billion’s worth of demand for the new bonds, one source saidTo placate investors over the risk of a potential downgrade to junk status, the bonds contained a provision that raises the coupon paid to bondholders if Boeing loses its investment-grade status.
Boeing said this week it would cut its 160,000-person workforce by about 10%, further reduce 787 Dreamliner production and try to boost liquidity as it prepares for a years-long industry recovery from the pandemic, which drove its second consecutive quarterly loss.
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