Although spreads on Boeing Capital bonds widened by up to three basis points last week after the company announced that Phil Condit, ceo, had resigned and would be replaced by Harry Stonecipher, investors are not in a rush to snap up the bonds. Some investors say the move is a welcome change, but add the company still has lingering problems to sort out and its bonds remain relatively tight. Boeing Capital's benchmark 5.80% notes of '13 were trading at 91 basis points over Treasuries last Tuesday.
Dale Spencer, a portfolio manager at Aladdin Capital Management, says the bonds remain tight and he expects them to stay so. "I don't anticipate this as mushrooming from here. The backdrop of the market is so good right now over all. When you're in a bull market, the market tends to look away." Spencer says the management change will result in a cleaner company. Carlos Veintemillas, a portfolio manager at Texas Permanent School Fund, is not considering buying unless the bonds widen 10 basis points more and yields on Treasuries pick up. He states that while management changes can affect volatility, he agrees that the bonds are tight right now.
One analyst says it's too early to tell what fundamental changes the new ceo will enact. Kevin Morley, research head at Credit Suisse First Boston, says it's clear that "he's not there to facilitate a succession plan. His vision will emerge and it will be slightly different."
