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Boeing Borrows $4.9 Billion on Heels of Cut to Cusp of Junk

Molly Smith
·2 min read

(Bloomberg) -- Boeing Co. sold new bonds to help repay nearly $3 billion of debt, announcing the sale just minutes after a downgrade to the company’s credit rating.

The planemaker issued $4.9 billion of unsecured notes in four parts, according to a person with knowledge of the matter. The debt sale was announced in a filing earlier Thursday, just minutes after Fitch Ratings put out a report cutting Boeing one notch to BBB-, the lowest investment-grade rating, with a negative outlook.

The proceeds of the sale will help repay $2.8 billion of debt, which is either in the form of commercial paper or term bonds due next year. The longest portion of the offering, a 10-year security, will yield 280 basis points over Treasuries, after initially discussing around 300 basis points, said the person, who asked not to be identified as the details are private.

Boeing abandoned a forecast that it would stop burning cash next year and said it would eliminate an additional 7,000 jobs, almost doubling its planned cuts, in reporting third-quarter earnings this week. The company has burned through about $22 billion in free cash since March 2019, when regulators grounded the company’s best-selling jet after two fatal accidents.

It’ll likely be another two years until Boeing’s financial metrics are more in line with that of a credit rating one level higher, Fitch said in the report. The company is also rated BBB- with a negative outlook at S&P Global Ratings, while Moody’s Investors Service has it one step higher.

BNP Paribas SA, Deutsche Bank AG, Mizuho Financial Group Inc., Royal Bank of Canada, SMBC Nikko Securities Inc. and Wells Fargo & Co. were among managers on the bond sale, per the filing.

(Updates to reflect deal priced. An earlier version corrected the lead to say nearly $3 billion.)

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