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(Alliance News) - Moody's Investors Service on Tuesday assigned a Baa2 rating to BAE Systems PLC's proposed new senior unsecured notes.
The blue chip defence contractor and aerospace firm's long term issuer rating of Baa2 is unaffected by the potential USD2 billion issuance, Moody's noted. The ratings of BAE's subsidiaries will also remain unchanged, as will the Stable outlook.
The issue will be used to refinance the acquisition bridge facility that was drawn down to finance the purchase of the Collins Aerospace Military Global Positioning System business from Raytheon Technologies Corp.
"The Baa2 ratings reflect the company's: large scale and long term defence contracts; position as a critical defence supplier to the US and Saudi Arabian governments, and a strategic supplier to the UK government; high barriers to entry and technological leadership; substantial proportion of stable support and service revenue; highly diversified product base; and solid track record of contract execution," Moody's said.
The credit ratings agency also noted BAE's "long-term resilient nature" and the company's "willingness and ability to maintain a strong balance sheet", which will help it weather the potential short and longer-term effects of the coronavirus pandemic, Moody's said.
The stable outlook, Moody's said, takes into account the "relatively robust" defence sector and Moody's expectations that BAE will reduce leverage over the next 12 to 18 months after a temporary increase following the completions of largely debt-financed acquisitions in 2020.
By Paul McGowan; paulmcgowan@alliancenews.com
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