Boeing (BA) - Get Report is looking to arrange an additional $4 billion revolving line of credit from a group of lenders led by Citigroup as it prepares to ride out an even longer-than-expected slowdown in global aircraft demand.
Citing people with knowledge of Boeing’s plans, Bloomberg reported the airplane maker was in discussions to secure a $4 billion two-year “revolver” loan with an option to increase the size to as much as $6 billion.
So-called revolver loans are typically used as back-up forms of liquidity. Boeing, however, has leaned heavily on banks for financing over the past year.
In early 2020, following a pair of crashes that grounded the 737 MAX globally, Boeing signed a $13.8 billion delayed-draw term loan, drawing the full amount down just weeks later amid the onset of the pandemic.
In recent months, Boeing has faced a slew of postponed or suspended orders as global air travel continues to remain depressed. The company also is dealing with manufacturing flaws in its 787 Dreamliner, and is trying to resolve issues that have halted deliveries of the jetliner since October.
Boeing has about $9.5 billion of unused revolving credit facility capacity in three tranches spread out over 364-day, three-year, and five-year portions.
While investor demand for Boeing debt has remained strong, the company’s investment-grade rating has come under pressure over the past year. The planemaker is now rated BBB-, the last rung before junk, by both S&P Global Ratings and Fitch Ratings. Moody’s Investors Service rates it one step higher at Baa2.
Separately, Canaccord Genuity analyst Kenneth Herbert on Friday raised his recommendation on Boeing to buy from hold.
Shares of Boeing were up 1.29% at $227.15 in trading on Friday. The Chicago-based company last week agreed to pay $6.6 million in penalties to settle three matters with the Federal Aviation Administration.