Moody’s lifts Embraer

Moody's Investors Service said it upgraded Embraer SA's corporate family rating to Ba1 from Ba2.

“The upgrade of Embraer's rating to Ba1 reflects the improvement in credit metrics related to a gradual recovery in deliveries, operating performance and backlog, as well the company's proactive debt reduction, including a material $600 million debt repayment in the third quarter of 2023. Embraer's adjusted gross leverage declined to 3.1x in the 12 months that ended September 2023, while operating margins recovered to 10.9% from 5.4% at the end of 2022.

“Despite the delays in production related to supply chain and labor issues, the company was able to increase deliveries of aircraft in the commercial segment, grow revenue for the services and support segment, executive jets, and post higher profitability in the defense and security business with the commercialization of the KC-390 aircraft,” Moody’s said in a press release.

Additionally, the agency said it expects Embraer to continue shaving its adjusted leverage to 2.5x-3x in the next 12-18 months.

The outlook remains stable.

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