Fitch Ratings, last week, assigned Russian-based Sukhoi Civil Aircraft Company (SCAC) a Long Term Issuer Default (IDR) rating of BB+, a senior unsecured rating of BB+ and a Short-term IDR of B. All ratings apply to foreign and local currency debt, said Sukhoi, adding the Fitch outlook on the Long Term IDR is Stable. Fitch also assigned National ratings of Long-term AA(rus) and Short-term F1+(rus) to the company. SCAC has public debt of RUB5 billion.
The rating demonstrates Sukhoi Civil Aircraft has a comprehensive information disclosure policy and adequate business transparency to attract loans and investments on more cost-effective basis, said the company, which added that it also indicated the company’s strategy is sound and that it has the appropriate management structure and policy.
The ratings are based on SCAC’s links to its ultimate parent, the Russian government which is expected to provide additional equity injections beyond its current investments. Other factors influencing the rating include strong local demand for the company’s regional jets, driven by the high economic growth in recent years, the presence of French-based engine manufacturer SNECMA as risk-sharing partner on the Super Jet 100 program and the long-term positive cash flow generation capabilities of the company’s business model. Alenia Aeronautica will shortly hold a 25-percent-plus-one-share stake.
“The Long-Term IDR BB+, outlook stable, assigned to Sukhoi Civil Aircraft by Fitch Ratings is unique in the Russian aviation sector,” said Maxim Grishanin, SCAC’s senior vice-president on economics and finance. “Moreover, Fitch’s independent evaluation confirms the long-term business viability even at the start-up stage, when the company is not generating enough cash flow from its main operating activities. At the same time, the Issuer Default Rating of BB+ is a reliable indicator of SCAC’s ability to perform its long-term commitments before its investors and creditors.”
At 31 December 2007, SCAC had gross debt of approximately $576 million, of which $98 million was short-term. It also had unrestricted cash and cash equivalents were $103 million.