S&P lowers Embraer

S&P said it downgraded Embraer SA to BBB- from BBB, citing the effect of the coronavirus outbreak.

“In response to Covid-19, we expect many airlines to try to delay new aircraft deliveries until at least the end of the third quarter of 2020, which will likely pressure Embraer's cash flow and credit metrics. As a result, the company could post debt to EBITDA possibly higher than 2.5x in 2020,” said S&P in a press release.

S&P said it kept Embraer’s rating on CreditWatch with negative implications, but changed the CreditWatch on the issue ratings to developing from negative, because the ratings will depend on final terms and conditions that could vary, and depending on the strength of the link between the joint venture and Boeing's credit profile, which is stronger than Embraer’s.

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