BAE Systems: poor defence

Credit of the month


BAE Systems, the UK defence company, appears incapable of capitalising on the possibility for war. In late February, Fitch Ratings downgraded the company’s credit rating to BBB+ from A-, and maintained a negative outlook.

BAE’s problem is that it is working on two large defence contracts for the British government, both of which BAE is receiving a fixed amount for and both of which are over budget.

In a comment announcing the downgrade, Fitch said that “substantial cost overruns and d