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Investing.com -- Moody’s Ratings has affirmed Embraer S.A.’s Baa3 long-term issuer rating and changed the outlook to positive from stable, citing continuous improvements in credit metrics, liquidity, and strong operational results.
The rating agency noted that Embraer’s gross leverage (Moody’s adjusted) declined to 2.5x in 2024 from 4.7x in December 2023. The Brazilian aircraft manufacturer’s free cash flow increased substantially from $142 million to $505 million during the same period.
In the 12 months ending June 2025, Embraer generated positive free cash flow of $479 million, with gross leverage at 2.6x and net leverage at 1.2x. Moody’s expects the company’s leverage to decline below 2x in the next 12-18 months and anticipates Embraer will become net cash positive.
The positive outlook reflects Moody’s expectation that Embraer is well-positioned to capitalize on favorable conditions in the aerospace and defense sector. The company benefits from shorter lead times than competitors and a portfolio of well-accepted products, including the E-175 jet which holds a dominant position in its market niche.
Embraer’s Baa3 rating reflects its position as the leading regional jet manufacturer, its reputation for reliability, strong liquidity from large cash balances, manageable debt maturity profile, and adequate credit metrics. The rating also considers the potential for funding support from Brazilian public banks if needed.
As of June 2025, Embraer’s cash and short-term investments totaled $1.5 billion (approximately $1.3 billion excluding EVE), sufficient to cover all debt maturities through 2030. The company also maintains $1 billion in committed credit lines due in August 2029.
Moody’s indicated that further rating upgrades would require sustained positive free cash flow, gross leverage ratios strengthening to less than 2x, a cash position matching debt balance, and interest coverage remaining above 6x, along with strong liquidity and conservative financial policies.
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