The ratings on the U.K.-headquartered defense contractor BAE Systems PLC reflect our view of its strong competitive positions in the global defense market through a portfolio of diverse high-priority programs. BAE Systems designs, develops, and manufacturers a wide range of land combat vehicles and armaments, defense electronics, submarines, surface combatants, military aircraft, security electronics, and provides support services. The company benefits from its good customer, program, and geographic diversification. The rating is likewise supported by our view of the favorable credit characteristics of the defense industry. The ratings incorporate our expectations that BAE Systems will continue to pursue a financial policy that we consider to be moderate. These strengths are partly offset by the risk associated with potential additional acquisitions
