Fitch affirms BAE Systems

Fitch Ratings said it affirmed BAE Systems plc's long-term issuer default rating and senior unsecured rating at BBB and short-term issuer default rating at F2.

The outlook is stable.

At the same time, the agency affirmed BAE Systems Holdings Inc.'s senior unsecured note rating at BBB and commercial paper program short-term rating at F2.

Fitch said the rating reflects the group's strong business profile, built on deep and longstanding relationships with the U.K. and U.S. governments. Relatively weak recent cash flows for the sector limit the upside potential of the rating, although they are expected to improve in the short- to medium-term.

In addition, de-leveraging capacity remains constrained as a result of shareholder distributions and pension contributions, the agency explained. An improving end-market outlook, particularly in the U.S., has reduced downside risk to the rating.

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