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21 January 2020

Boeing set to secure $10 billion loan from a consortium of banks

The new financing comes on top of $9.5 billion in revolving credit facilities signed last October 2019, which at the time doubled the size of the company’s existing credit lines.

Fresh funding would help the US planemaker contend with growing financial strain/Bloomberg

by Bloomberg

Boeing is close to securing a $10 billion financing facility to bolster the plane maker’s finances in the midst of a crisis that has seen its 737 Max jetliners grounded after two crashes.

The financing could still be increased if demand from investors exceeds the target size, the people said. Commitments are due by the end of this week, said the people, who asked not to be named because the details aren’t public. The loan will have a maturity of two years and will include a delayed-draw structure, in which the borrower can access the funds at a later date, they said.

Pricing on the loan will be based on Boeing’s credit rating—which is presently at A3 by Moody’s. The rating agency has placed the manufacturer’s senior unsecured debt on review for a downgrade, saying it could face a ‘costly and protracted’ recovery and ‘heightened operational and financial risk.’

Fresh funding would help the US planemaker contend with growing financial strain as it reimburses customers, keeps suppliers afloat and maintains around 400 newly built Max that it can not deliver until global regulators clear the jet to fly.

A production halt this month on the Max, which has been grounded since March 2018, is a sign that its emergence from the crisis will be lengthy.

Investment-grade companies typically leave their revolvers undrawn to serve as a form of back-up liquidity.

The long-term grounding of the Max cost the company its title as the world’s largest plane maker after the number of jetliners it delivered in 2019 dropped to less than half of Airbus’ tally.







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