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Law360 (May 1, 2020, 5:28 PM EDT) -- Boeing Co., advised by Kirkland & Ellis LLP, has sold a massive $25 billion in bonds intended to boost the aerospace giant's cash reserves during the coronavirus pandemic, enough so that it does not plan to seek federal bailout funds.
Boeing's offering, announced late Thursday, contains bond instruments across seven tranches with maturities spanning three to 40 years. Boeing described the transaction as one of "several steps we're taking to keep liquidity flowing through our business and the 17,000 companies in our industry's supply chain."
"The robust demand for the offering reflects strong support for the long-term strength of Boeing and the aviation industry," Boeing said in a statement.
The planemaker also credited federal relief under the Coronavirus Aid, Relief and Economic Security, or CARES, Act for stabilizing markets in recent weeks. The CARES Act had provisions provide relief for businesses "critical to maintaining national security" and also provide targeted aid to the airline industry. Given the results of its bond financing, Boeing said it does not plan to seek additional funds from the federal government or revisit the capital markets soon.
"We will continue to assess our liquidity position as the health crisis and our dynamic business environment evolve," Boeing said.
Boeing is also working its way through costly legal and regulatory woes following the grounding of the 737 Max. The once-popular jet was involved in fatal crashes in Indonesia and Ethiopia in 2018 and 2019, respectively.
Boeing's bond, if it closes May 4 as expected, will be the largest U.S. marketed corporate bond of 2020, according to Dealogic. It also continues a surge in corporate borrowing.
Companies are tapping debt markets in soaring numbers in order to bolster their cash reserves amid a steep economic contraction caused by the pandemic. Through April, 341 companies have issued investment-grade corporate bonds that raised $552 billion, according to Dealogic. That's up from 242 similar bonds that raised that $268.4 billion at this time last year.
Chicago-based Boeing is an investment-grade company, meaning it is ranked in the top tier of corporate issuers in terms of creditworthiness. High-yield bonds, which are debt instruments issued by corporations that rank below investment grade have also surged amid the pandemic.
Citigroup Global Markets Inc., BofA Securities, Inc., J.P. Morgan Securities LLC, Wells Fargo Securities, LLC, BNP Paribas Securities Corp., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, Mizuho Securities USA LLC, Morgan Stanley & Co. LLC, RBC Capital Markets LLC, SMBC Nikko Securities America Inc. are lead underwriters for Boeing's offering.
Boeing is represented by a Kirkland & Ellis LLP team led by capital markets partners Bob Hayward and Michael Keeley and associates Puja Narain and Katie White. The Kirkland team also included tax partners Sara Zablotney and Vincent Thorn and associate Amanda Milhet, and investment funds partner Josh Westerholm.
The underwriters are represented by Shearman & Sterling LLP team led by by capital markets partners Lisa Jacobs and JD DeSantis; tax partner Kristen Garry; of counsel Danforth Newcomb (litigation); environmental counsel Jason Pratt; and capital markets associates Robert Giannattasio, Nneka Chukwumah and Nicole Chessin.
--Editing by Alanna Weissman.
Update: This story has been updated with additional counsel information.
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