S&P gives Embraer notes BBB-

Standard & Poor's said it affirmed its BBB- long-term corporate credit rating on Embraer - Empresa Brasileira de Aeronáutica SA.

At the same, the agency said it assigned its BBB- rating to the forthcoming $300 million guaranteed notes due 2017 to be issued by Embraer Overseas Ltd. and irrevocably and unconditionally guaranteed by Embraer.

The outlook on the corporate credit rating is stable.

S&P said that the corporate credit rating on Embraer reflects the company's satisfactory business profile, resulting from a favorable position in the global commercial aircraft market, its adequate product portfolio and firm backlog, its comparatively low cost structure and high productivity in its industry segment and its intermediate financial profile, reflected in moderate debt levels relative to cash flows and liquidity.

These positives are partly offset by Embraer's indirect exposure to the weaker credit quality of its customer base, by some backlog concentration with key customers, by its dependence on some government credit sources to finance clients, as well as its dependence on other aircraft financing sources and by a weakening market segment for 50-seat planes, which may put some pressure on the residual values of the company's smaller regional jet family in the future, S&P noted.

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