S&P rates Embraer BBB-

Standard & Poor's said it assigned BBB- local- and foreign-currency corporate credit ratings to Brazil-based Empresa Brasileira de Aeronáutica SA (Embraer).

The outlook is stable.

The ratings reflect Embraer's satisfactory business profile, which S&P attributed to a favorable position in the global commercial aircraft market, adequate product portfolio and firm backlog, comparatively low cost structure and high productivity in its industry segment, as well as an intermediate financial profile, reflected in moderate debt levels relative to cash flows and sound liquidity.

These positives are partly offset by Embraer's indirect exposure to the comparatively weaker credit quality of its customer base, some backlog concentration in key customers, some dependence on government credit sources to finance clients and a weakening 50-seat market segment, the agency said.

The ratings assigned to Embraer are significantly higher than the sovereign ratings of its home country, the Federative Republic of Brazil (foreign currency BB-/positive/B, local currency BB/positive/B). S&P said this reflects Embraer's limited exposure to Brazilian economic and operating conditions due to its predominantly export-oriented revenue base and low dependence on domestic infrastructure, combined with its moderate financial leverage.

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