Boeing, Goldman’s new bond offerings showing strong investor demand

By: Auther Bett
Auther Bett
Auther V. Bett, CPA started reporting in the finance and accounting space in 2016. His interests span stocks, bonds,… read more.
on May 4, 2020
  • The Federal Reserve Bank is investing in corporate bonds to help stimulate the economy.
  • Boeing has recorded a steady demand for its latest bond issue amid the pandemic.
  • Goldman is also offering a high yielding corporate bond that corresponds with the FTSE Goldman Bond Index.

Over the last couple of weeks, the bond market has undergone dramatic changes most triggered by the Coronavirus pandemic. Private and state support has been instrumental in keeping the market afloat, and the efforts seem to be bearing fruits.

Fixed income earners looking to invest in corporate bonds are set to enjoy a recent easing program by the Federal Reserve Bank. Boeing (NYSE: BA), America’s largest aeroplane manufacturer has already reported a significant increase in the demand for its latest bond issue.

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In line with a CNBC report, the “demand for new Boeing debt was strong across multiple maturities. Boeing shares jumped 3% to highs of the day amid the report.”

Sources familiar with the plane maker’s paper indicated that the high demand for the company’s bond could add up to $75 billion in 5-, 7-, 10-, 20-, 30-, and 40-year bonds.

“Boeing is interested in raising to $20 billion in new debt, but given the increased demand, the company may be looking for more now,” said the sources.

Boeing is among companies that have successfully floated lucrative debts before and this round may not be any different, especially with the Fed’s efforts in boosting the economy. Netflix (NASDAQ: NFLX) and Delta (NYSE: DAL) have also issued debt to augment growth amid the current slowdown.

Goldman Sachs’s ETF

As the Fed steps in to purchase company bonds to keep the economy afloat, Investment bank Goldman Sachs (NYSE: GS) has also issued an ETF, the Goldman Sachs Access Investment Grade Corporate Bond ETF (GIGB) to provide results that tally with the performance of the FTSE Goldman Sachs Investment Grade Corporate Bond Index.

Goldman’s fund aims at attaining a minimum of 80% investment of its assets (excluding collateral held from securities lending) in bonds features on its index. The rule-based index evaluates the performance of investment grade.

The banker is offering a high yielding corporate bond that corresponds (before fees and expenses) with the FTSE Goldman Sachs High Yield Corporate Bond Index. Similarly, this fund seeks to attain at least an 80% investment of its assets (excluding collateral held from securities lending) in bonds features in its index. This index is also rule-based meant to gauge the performance of high yield corporate bonds (USD dominated) that meet underlying essential screening and liquidity criteria.

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