Moody's rates BAE Systems notes Baa2

Moody's Investors Service said it assigned a Baa2 rating to the proposed $1.1 billion offering of new senior notes due 2024 to be issued by BAE Systems Holdings Inc. The Baa2 senior debt rating of parent holding company BAE Systems plc is unchanged, and the outlook is stable.

Proceeds will be used for general corporate purposes, including the prefunding of 2015 ($750 million 5.2% bonds) and 2016 ($350 million 3.5% bonds) debt maturities.

The agency said BAE's Baa2 rating reflects the company's large size and scale as the United Kingdom's leading defense contractor and a prime defense supplier to the U.S. and other global markets.

Lingering weakness in key credit metrics, however, continue to correlate to only limited flexibility for operational disruptions, debt-financed acquisitions and/or elevated shareholder return initiatives, at least some of which the company has undertaken in the past, Moody’s added.

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