Fitch Ratings has revised BAE Systems Plc's (BAE) Outlook to Negative from Stable. The agency has also affirmed the aerospace group's Long-term Issuer Default Rating (IDR) and senior unsecured rating at 'BBB+' and Short-term IDR at 'F2'.
BAE Systems Holdings Inc's notes' senior unsecured rating of 'BBB+' and its commercial paper programme's Short-term rating of 'F2' are also affirmed.
The change in the Outlook to Negative reflects a weakening of certain financial ratios in recent years, such as the company's free cash flow (FCF) margin and gross leverage, to outside the parameters expected of a 'BBB+' rating. While Fitch believes these metrics may improve in the short term, should they remain at present levels, the overall credit profile of the company may no longer be commensurate with the 'BBB+' rating.