(Finance) – Moody’s confirmed the ratings Probability of Default (CFR) and Corporate Family (CFR) di Leonardo, big Italian defense, respectively at Ba1-PD and Ba1. At the same time, the rating agency confirmed the Senior Unsecured rating at Ba1 and Leonardo US Holding’s Senior Unsecured rating at Ba1. Leonardo’s Baseline Credit Assessment (BCA) is ba1. L’outlook on all ratings remains positive.
The revision follows the change in the outlook to negative from stable on the long-term issuer rating Baa3 of the Italian government. Moody’s believes that Leonardo could be rated one notch above the Italian sovereign rating, in the event of a downgrade of the Italian sovereign rating to Ba1, for a number of reasons: the company’s high share of revenues outside its home market; exposure to resilient end markets of Defense; a significant share of operational assets based outside of Italy; limited reliance on national funding sources with good access to international bond markets; limited exposure to foreign currency risk.
The main challenges for Leonardo, according to Moody’s, relate to the group’s ability to manage the increase in input costs while continuing to guarantee attractive orders. “We also expect theexposure of the group to civil aeronautics it will continue to lag behind the strong performance of its other segments, as it is largely geared towards wide-body aircraft which will take longer to recover, “the report reads.
The positive rating outlook reflects the expectation that Leonardo’s credit metrics will further improve in the next 12-18 months, supported by favorable sector dynamics, which will cement the path towards an investment grade rating. The positive outlook also includes the expectation that Leonardo continue to pursue conservative financial policies in line with its commitment to return to an investment grade rating.