Moody's rates Embraer debt Baa3

Moody's Investors Service said it assigned Baa3 global local currency issuer and indicative foreign currency debt ratings to Empresa Brasileira de Aeronautica SA (Embraer).

The outlook is stable.

The ratings reflect the company's position in the global aerospace market as one of only a few providers of commercial aircraft in the 30-to-110-seat jet segments and cost-effective intelligence, surveillance and reconnaissance aircraft, the agency said.

Acknowledged in the ratings are the company's volatile and, for the rating category, somewhat weak cash flow to debt financial metrics, the volatility of cash flow as a result of large swings in working capital usage and from, among other factors, demands by commercial airlines for financing, the highly cyclical demand for regional aircraft (expected to remain the largest of the company's business segments), the concentration of the market for commercial jets in the United States, and the uncertainties and cost associated with the company's expansion of its business jet product lines.

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