Boeing is said to consider ways to raise cash to avoid downgrade

Boeing (NYSE:BA) is weighing how to raise cash through a sale of shares and equity-like securities as the aviation giant seeks to avoid a downgrade of its credit rating into junk status, Reuters reported Wednesday, citing people familiar with the matter.

Shares of Boeing (BA) fell 2.2% on Wednesday morning, compared with little change in the Standard & Poor’s 500 stock index (SP500).

Bankers from Goldman Sachs, J.P. Morgan, Bank of America and Citigroup in the past few weeks have met with Boeing’s (BA) management to recommend fundraising strategies.

The possibilities include a sale common stock and securities such as mandatory convertible bonds and preferred equity, Reuters reported, citing its sources. A source said Boeing (BA) should raise about $10 billion.

Bonds that convert into stock can be treated as equity capital by rating agencies without adding to corporate debt, and may be more favorable for existing shareholders.

Banks also have been assembling what are known as shadow books to gauge potential interest in Boeing’s (BA) securities.

Boeing (BA) CFO Brian West last month said the company was constantly evaluating its capital structure and liquidity “to ensure that we could satisfy our debt maturities over the next 18 months while keeping confidence in our credit rating as investment grade.”

The company has been burning cash since a near-catastrophe involving a 737 Max jet flown by Alaska Airlines led the Federal Aviation Administration to cap Boeing’s (BA) output of the plane. Adding to the company’s crunch, workers in the Pacific Northwest went on strike amid demands for higher pay.