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Bond Market News
Embraer Upgraded to BBB by S&P on Strong Backlog and Profitability
September 19, 2025
Brazilian aerospace company, Embraer, was upgraded to BBB from BBB- with a stable outlook by S&P. The rating agency cited the company’s stronger business position, rising deliveries and record backlog as primary reasons for the rating action. Embraer ended 2Q2025 with a $29.7bn order book, up 40% YoY, supported by higher deliveries across commercial, executive and defense segments. The company delivered 91 aircrafts in 1H2025, marking a 26% YoY increase.
S&P highlighted Embraer’s improving profitability, with EBITDA margins expected to remain in the 10-11% range over the next two years. S&P added that it expects leverage to consistently stay below 1x. Liquidity remains robust, aided by solid cash flows of ~$700mn annually and the issuance of its $650mn 5.98% 2035s in February, to repay shorter term debt. However, capex is expected to increase to $550-650mn in the coming years, $200mn of which will be for the development of its electrical vertical take-off and landing (eVTOL) aircraft.
S&P noted Embraer’s successful navigation of US tariff risks after US increased tariff on Brazil to 50% from 10%. However, S&P expects an annual reduction of $35-40mn in EBITDA (~0.5%) due to tariffs.
Embraer’s 5.98% 2035s were trading higher by 0.7 points yesterday at 105.9, yielding 5.2%. They have rallied by 8% since their April lows of 97.9 cents on the dollar.
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