Boeing's Credit Rating Is Lowered For First Time In History

For the first time in its history, The Boeing Co.'s credit rating has been downgraded by Moody's Investors Service Inc., a major New York bond-rating service.

The rating, lowered to A1 from Aa3 (Aaa is the top rating), will make it more costly for Boeing to borrow money as it works through a slowdown in orders, production cuts and layoffs. A1 is the fourth highest rating. When ratings are lowered, investors consider bonds more risky and demand higher interest rates.

About $1.7 billion of long-term debt is affected. It doesn't affect short-term borrowings such as lines of credit with banks.

Boeing has been borrowing in the public debt market only since 1986, said Paul Binder, Boeing spokesman. The company's stock price rose 12.5 cents in early trading today to $35.12 per share, after losing 62.5 cents yesterday.

Moody's said Boeing faces an unfavorable operating outlook, continuing heavy investments to produce its new 777 jetliner and growing demand for customer financing from the hard-hit airline industry.

Moody's said it does not believe the commercial aircraft market will improve before 1995, and that the recovery will be more gradual than in previous cycles.

Moody's stressed that Boeing's financial condition should remain strong during the tough times for airlines and jet producers.

Last month, Standard & Poor's, another major bond-rating service, affirmed its AA senior debt rating for Boeing, but revised its rating outlook to negative from stable, citing similar reasons.