01 May 2020 by jbchevrel
Here an update on Boeing (noted BA). Pre-covid (21 feb) BA 5y CDS was at around 60bp. it culminated at 630bp on 24 mar, more than halved to around 300bp about two weeks ago (15 apr) and is now back +125 from there, 425bp area. We had a relatively eventful week, making it one of the most active names in US IG. Monday, CEO said BA would tap market to raise cash within 6 months. Wednesday, BA reported a -$0.64b net loss for Q1. Revenue -26%. BA will cut -10% workforce and cut production of most commercial planes. Wednesday, S&P downgraded BA to BBB- and warned BA earnings and CF are likely to weaken vs previous estimates, over next 2y. Thursday, BA came to the market with a mega-deal $25b. That 3-40y $25b deal is to compare with YTD -$20b cash drain and initial communication of $10b+. Seemingly, the size got increased thanks/due to high demand. As of Q1, BA had $39b debt. They had already borrowed $13b from JPM and C. BA said that post deal and with other liquidity sources at hand (Fed), they reckon they now have enough buffer to manage the business. In this respect, BA said that the market’s appetite had eliminated the need for it to seek government funding, although it will benefit from existing facilities (the $2t Cares Act includes $17b for companies deemed critical to national Defense, which BA is part of).