The combination of a "strong" business risk profile and an "intermediate" financial risk profile results in a split anchor of 'a-' or 'bbb+'. For BAE Systems PLC, we choose the 'bbb+' anchor, as we consider BAE to be at the weaker end of the "strong" business risk profile range compared with peers. Strong competitive position in global defense markets. Portfolio of high-priority and geographically diverse military programs. Strong and diverse capabilities. Stable profitability. Consistent generation of positive free operating cash flow (FOCF). Strong liquidity. Significant accounting pension deficit on a reported and Standard&Poor's-adjusted basis. Shareholder-friendly remuneration policies. The negative outlook reflects the possibility that we could lower our long-term rating on BAE to 'BBB' within the next two
