BAE Systems: poor defence

Credit of the month

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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

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