Moody's upgrades Irkut to Ba1

Moody's Investors Service said it assigned an Aa1.ru national scale rating to Irkut Corp. and upgraded its corporate family rating to Ba1 from B1 following the acquisition of a 38.22% stake in the company stake by United Aircraft Corp., a majority Russian state-owned holding company.

This concludes the review for upgrade begun on Sept. 14, and the outlook is stable.

The agency said the ratings reflect a medium level of financial support from the Russian Federation; the strong market position of Irkut's SU-30MK multi-role jet fighter among the Indian, Algerian and Malaysian air forces and increasing exports to other markets; the company's ability to deliver products that can compete internationally; positive trends of diversifying the product range into non-defense related areas, for example the BE-200 multipurpose amphibious aircraft and components production for EADS; and a solid backlog of signed orders providing for medium-term revenue visibility.

The ratings remain constrained by Irkut's weak position with its most significant domestic client, the Russian military, exposing it to political uncertainties that may affect business prospects and undermine future revenue potential; a concentration on one foreign customer; substantial global competition; one main product accounting for a core part of the revenue and approaching the maturity of its lifecycle; the predominance of sales outside Russia; and a challenging operating environment characterized by significant political, legal, fiscal and exchange rate risks, Moody's said.

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