$Boeing(BA.US)
Boeing Bonds: Why the 2040 May Make More Sense
Boeing’s August deliveries dipped to 51 aircraft, with 787 handovers falling to four from nine a year earlier. While this warrants monitoring, it does not yet undermine the broader recovery story.
FY2026 fundamentals are improving. First-half revenue reached US$46.8bn, operating cash flow turned positive at US$1.19bn and free cash flow improved to US$823m. Backlog has also climbed to roughly US$715bn. However, Boeing still carries about US$45.9bn of debt, leaving limited room for execution mistakes.
For bond investors, the choice between the BA 5.705% 01May2040 and BA 5.805% 01May2050 comes down to compensation versus duration.
The 2050 offers a higher yield of roughly 6.3% versus around 6.0% for the 2040, but investors are taking another decade of interest-rate and credit-spread exposure for only about 30bps more yield. Its deeper discount may look attractive, but price alone should not drive the decision.
The 2040 therefore offers a cleaner risk/reward profile. If Boeing continues repairing cash flow and leverage, improving credit spreads could support both income and capital appreciation without taking on the extreme duration of the 2050.
For Singapore investors, there is another layer: USD/SGD risk. A stronger SGD can erode returns when USD coupons and principal are converted back into SGD. Long-term investors should therefore evaluate the bond on a total SGD return, not simply its USD yield-to-maturity.
The pick: BA 5.705% 2040. The 2050 becomes more compelling if its yield rises materially—around 6.75–7%—without deterioration in Boeing’s credit fundamentals.
Not financial advice.
