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Bond Market News
Embraer Upgraded to IG Status of BBB- by Fitch
September 23, 2024
Embraer was upgraded by a notch to IG-status of BBB- from HY-status of BB+ by Fitch, making it a rising star. The rating agency also upgraded Embraer’s senior unsecured debt by a similar measure. The upgrade comes on the back of improving credit metrics as a result of an increase in production, delivery profile and profitability combined with reduction of gross debt. For instance, Embraer’s order backlog for commercial aviation stood at 382 aircraft at the end of 2Q24, higher than the 338 figure in 2019. Embraer has efficiently diversified its business by investing in new projects like the E2 family, KC-390 and its service and support operations, benefitting its business profile, according to Fitch. Embraer has reduced gross debt and paid around $1.6bn since end-2020. Fitch forecasts Embraer’s consolidated total and net leverage ratios to trend down to 4.0x and 0.9x in 2024 and 3.5x and 0.7x by end-2025, respectively.
Its dollar bonds traded stable with its 7% 2030s at 107.8, yielding 5.37%.
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