On March 24, 2003, Standard&Poor's Ratings Services lowered its ratings, including lowering the long-term corporate credit rating to 'BBB' from 'A-', on BAE Systems PLC. The ratings on the Farnborough, U.K.-based defense supplier were removed from CreditWatch, where they were placed Dec. 12, 2002. The outlook is stable. The 'A-2' short-term corporate credit and commercial paper ratings were not on CreditWatch and were affirmed. About £3 billion of debt is outstanding. The downgrade reflects BAE Systems' poor profitability, weak cash flow generation, a decline in historically strong liquidity, and a sizable pension deficit. The company's credit profile continues to benefit from a strong competitive position in the global defense market, an industry with generally favorable credit characteristics. BAE
