Boeing (BA) – Get a report seeks to arrange an additional $ 4 billion revolving line of credit from a group of Citigroup-led lenders as it prepares to weather an even longer-than-expected slowdown in global demand for aircraft.
Citing people with knowledge of Boeing’s plans, Bloomberg said the aircraft maker was in talks to secure a $ 4 billion two-year “gun” loan with an option to scale up to $ 6 billion. .
The so-called revolver loans are generally used as a form of emergency cash. Boeing, however, has relied heavily on banks for funding over the past year.
In early 2020, following two crashes that brought the 737 MAX to a standstill around the world, Boeing signed a $ 13.8 billion deferred drawing term loan, reducing the total amount a few weeks later at the start of the pandemic.
In recent months, Boeing has faced a slew of postponed or suspended orders as global air travel remains depressed. The company is also facing manufacturing flaws in its 787 Dreamliner and is trying to fix issues that have halted deliveries of the airliner since October.
Boeing has approximately $ 9.5 billion of unused revolving credit facility capacity in three tranches spread over 364-day, three-year and five-year tranches.
While investor demand for Boeing debt has remained strong, the company’s quality rating has come under pressure over the past year. The planner is now rated BBB-, the last step before the junk, by S&P Global Ratings and Fitch Ratings. Moody’s Investors Service gives it a rating above Baa2.
Separately, Canaccord Genuity analyst Kenneth Herbert on Friday recommended Boeing to buy on hold.
Boeing shares rose 1.29% to $ 227.15 on Friday. The Chicago-based company last week agreed to pay $ 6.6 million in penalties settled three cases with the Federal Aviation Administration.