Fitch Affirms Sukhoi Civil Aircraft at 'BB'
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Fitch Affirms Sukhoi Civil Aircraft at 'BB'; Stable Outlook

23 Jan 2013 4:46 AM

Source: FitchRatings

Fitch Ratings-London/Moscow/Warsaw-23 January 2013: Fitch Ratings has affirmed Sukhoi Civil Aircraft JSC's (SCAC) Long-Term Issuer Default Ratings (IDR) at 'BB' with a Stable Outlook. A full list of rating actions is at the end of this release.

KEY DRIVERS

  • State Support:

In line with Fitch's parent subsidiary linkage methodology, SCAC's ratings are driven by its strong links to its ultimate majority shareholder, the Russian government ('BBB'/Stable). Due to its shareholding, Fitch expects SCAC to continue to receive support from the Russian state via additional equity injections over and above what has already been contributed. Any waning, or perceived waning, of that support, is likely to lead to SCAC's ratings being further notched down from those of the sovereign.

  • Super Jet 100:

This relationship is underpinned by the strategic importance of the Super Jet 100 (SSJ 100) aircraft to the state. The SSJ 100 is the only product SCAC has delivered to date, although a business jet version has been launched and is scheduled to be delivered in 2014. SCAC can rely on the support of the Russian state for additional equity injections over and above what has already been contributed.

  • Expected Emerging Market Demand Not Hindered by Indonesia Crash:

Other factors influencing the rating are the strong emerging market demand for the SSJ 100 (181 firm orders taken to date plus 75 options), which is unlikely to be negatively affected by the May 2012 crash of the SSJ 100 demonstrator flight in Indonesia, the cause of which was pilot error. Fitch notes that no orders have been cancelled as a result of the crash.

  • Stable Outlook:

The Stable Outlook on the Long-Term IDR reflects that on the Long-Term foreign currency IDR of the Russian Federation.

RATING SENSITIVITY GUIDANCE:
Future developments that could lead to positive or negative rating actions include:
- Change to Sovereign Ratings:
As SCAC's IDRs and Outlook are driven by those of the Russian Federation, any change to the sovereign could prompt a review of the company's IDRs, National Ratings and Outlook.
- Degree of Sovereign Support:
The ratings and Outlook are also driven by the status of the support from the state. Any strengthening of this support, such as a provision of written guarantees of SCAC's debt from the Russian Ministry of Finance, would be likely to lead to a closer rating linkage. A weakening of support, such as a reduction in the state's shareholding in SCAC, or a waning commitment to the company's programmes, could lead to a widening of the rating gap between Russia and SCAC.

The rating actions are as follows:
Long-term IDR affirmed at 'BB'; Outlook Stable
Short-term IDR affirmed at 'B'
Long-term local currency IDR affirmed at 'BB'; Outlook Stable
Short-term local currency IDR affirmed at 'B'
Foreign currency senior unsecured rating affirmed at 'BB'
Local currency senior unsecured rating affirmed at 'BB'
National Long-term rating affirmed at 'AA-(rus)'; Outlook Stable
National Short-term rating affirmed at 'F1+(rus)'

Contact:
Principal Analyst
Dmitri Kazakov
Analyst
+7 495 956 5520

Supervisory Analyst
Tom Chruszcz
Director
+48 22 338 6294
Fitch Polska SA
Krolewska 16
00-103 Warsaw

Committee Chair
Emmanuel Bulle
Senior Director
+34 93 323 84 11

Media Relations: Julia Belskaya von Tell, Moscow, Tel: +7 495 956 9908, Email: moc.sgnitarhctif|lletnovayaksleb.ailuj#moc.sgnitarhctif|lletnovayaksleb.ailuj; Peter Fitzpatrick, London, Tel: +44 20 3530 1103, Email: moc.sgnitarhctif|kcirtapztif.retep#moc.sgnitarhctif|kcirtapztif.retep.

Additional information is available on www.fitchratings.com. For regulatory purposes in various jurisdictions, the supervisory analyst named above is deemed to be the primary analyst for this issuer; the principal analyst is deemed to be the secondary.

The ratings above were solicited by, or on behalf of, the issuer, and therefore, Fitch has been compensated for the provision of the ratings.

Applicable criteria, 'Corporate Rating Methodology', dated 8 August 2012, 'Parent and Subsidiary Rating Linkage', dated 8 August 2012, are available at www.fitchratings.com.

Applicable Criteria and Related Research:
2013 Outlook: Global Aerospace and Defense

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE.

23 Jan 2014 21:35


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