Boeing Considers Fundraising Options Amid Credit Rating Concerns

Boeing is currently exploring strategies to raise billions of dollars to safeguard its credit ratings from falling into junk status. According to insider sources, the aerospace giant is considering options such as issuing common stock and hybrid securities like mandatory convertible bonds and preferred equity. Investment banks including Goldman Sachs and JPMorgan have pitched various fundraising strategies to Boeing, suggesting a target of raising around $10 billion.

These hybrid securities are appealing because they can be classified as equity capital by rating agencies, potentially limiting the impact on Boeing's debt levels and preserving shareholder interests. Several banks have started gauging investor interest in these securities, preparing for potential issuance.

Maintaining an investment-grade rating is vital for Boeing, as it affects capital costs and access to stable institutional investment. The company is under financial pressure following production issues with the 737 MAX and a recent workers' strike, which have led to significant cash flow losses.

Boeing's CFO, Brian West, emphasized the importance of maintaining liquidity and credit ratings during a recent conference. With upcoming commitments totaling $16 billion and $11.5 billion of debt maturing by early 2026, Boeing faces a critical financial juncture.

Analysts predict that Boeing needs to raise between $10 billion and $15 billion to maintain its current credit ratings. Moody's has placed Boeing's Baa3 rating under review for a potential downgrade, while S&P Global Ratings has put Boeing on CreditWatch negative, highlighting the need for additional funding.

The decision on whether to proceed with the fundraising options remains pending, with Boeing and involved banks declining to comment further.