Boeing successfully raised $10 billion from public credit markets Monday, Bloomberg reports. The cash comes at a critical time when the company is still struggling to clean up the mess from its 737 Max 9 door plug blowout in January and get its production numbers back up to speed.
In March, Boeing CFO Brian West warned investors that fixing his company’s problems would be expensive. He wasn’t kidding: When Boeing presented earnings last week, it reported burning through nearly $4 billion in cash.
Bloomberg reports that there was nearly $80 billion in demand for the debt, which helped Boeing get a better interest rate. Both Moody’s and S&P have Boeing just a notch away from a speculative-grade (or “junk”) credit rating, which would substantially reduce the pool of money that would be allowed to purchase its bonds and notes. Moody’s reiterated its wariness in the rating it put on the new borrowings, giving the notes a “Baa3″ rating, also one step above speculative-territory.
“The negative outlook incorporates Moody’s view that the headwinds buffeting Commercial Airplanes will persist at least through 2026,” the firm said in a note explaining the rating for Boeing’s latest debt offerings. “The path to restoring compliance, higher quality and strong cash flow in its commercial aircraft assembly operations remains fraught with execution risk.”
West said last week on the earnings call that firming up Boeing’s cash position — $17 billion at last measure — and making sure its standing remains good among fixed-income investors are major priorities.
“We’re going to protect the investment-grade credit rating,” he said. “How the pieces play out? Stay tuned.”
Boeing shares rose about 4% in Monday trading, though they’re still down 33% for the year.