Boeing Shares Extend Gains After Third Point Bond Investment

Dan Loeb's Third Point Offshore Fund listed Boeing as one of its "winners' for the month of May, but subsequent reporting suggests the activist investors' position in the bonds, not the shares, of the world's second-largest planemaker.
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Boeing Co.  (BA) - Get Report shares extend gains Thursday, following the biggest single-day surge in nearly a month, as investors reacted to reports that suggested Dan Loeb's Third Point investment fund had taken an equity position in the world's second-largest planemaker. 

The activist investor's Third Point Offshore Fund listed Boeing, as well as Walt Disney Co.  (DIS) - Get Report and Burlington Stores  (BURL) - Get Report, as three of its five 'winners' for the month of May, igniting a rally in Boeing shares on the suggestion that the investment was equity based. CNBC later reported, however, that Third Point purchased Boeing debt. 

Boeing shares were marked 4.1% higher in early trading Thursday, against a 25 point decline forecast for the Dow Jones Industrial Average, to change hands at  $180.18 each, a move that would peg the stock's four-month decline at around 45%.

Corporate bonds have lagged stocks over the past two months following the Federal Reserve's March 23 decision to purchase $75 billion in company debt as part of its coronavirus rescue program -- the iShares iBoxx $ Investment Grade Corporate Bond ETF  (LQD) - Get Report , the market's largest, has risen more than 25% since that date, compared to a 39.5% gain for the S&P 500 -- but the support has allowed many companies, including Boeing, to strengthen their balance sheets with cheap financing.  

Boeing sold $25 billion worth of bonds in a seven-part deal priced on April 30 that was, according to IFR data, the sixth-largest U.S. dollar offering on record.

The deal also drew an unprecedented $288 billion in investor demand - just days after analysts at S&P lowered its credit rating to BBB-, two notches above 'junk' status. 

Boeing told investors prior to the offering that access to additional liquidity will be "critical" for the company, after its cash burn rate hit -$4.73 billion over the first quarter.

The planemaker's shares have also been supported by the partial re-start of its 737 MAX production program as well as statements from key European customers such as SMBC Aviation Capital, a Japanese-owned aircraft leasing company based in Dublin, and Germany's TUI Group  (TUIFY) , that suggest existing orders for the grounded plane would be delayed, but not cancelled, following talks with executives in Seattle and Chicago.