Moody’s lowers EADS to 'A2' on proposed ownership, governance changes

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Moody's Investors Service lowered the long-term senior unsecured debt rating on Airbus parent EADS and its subsidiary EADS Finance, each to "A2" from "A1", following the company's announcement of proposed changes to its governance and ownership structure that are expected to be implemented in 2013.

"While EADS will continue to be strategically important for both the French and German governments, we believe the planned changes will result in a lower degree of government influence and control when implemented, and an increased emphasis on commercial objectives," the ratings agency says in a research note. "Consequently, the rating downgrade reflects lower expectations for potential government support."

The rating outlook remains stable.

The "A2" rating reflects one notch of uplift above Moody's assessment of EADS' stand-alone credit profile due to potential government support, down from two notches previously.

Moody's baseline credit assessment for EADS is unchanged at "a3", reflecting the company's strong market position as a "leader in aircraft production with a sizeable and growing asset base and long-term revenue visibility associated with a very large backlog of orders".

The ratings agency expects that the pending changes in ownership, voting and governance will result in a "stronger emphasis on financial performance and returns over time."

However, Moody's did not revise its assessment of EADS' stand-alone credit worthiness because the rating agency expects that the requisite level of material improvements needed to substantiate a higher baseline credit assessment will occur gradually during several years,.

Moody's continues to categorise EADS as a government-related issuer.

It expects improvements in EADS's performance during the next three years. Specifically, EADS' Airbus A380 programmes is expected to be "less cash absorptive going forward".