it has upgraded the corporate family rating of MTU Aero Engines Holding AG to
'Ba1' from 'Ba2', but the rating outlook was downgraded to stable from positive.
The rating upgrade reflects the improvements in MTU's credit profile over the last 2 years from its highly leveraged past.
Benefiting from the substantial de-leveraging of the group's capital structure, improving operating performance and cash generation levels, credit metrics have improved beyond expectations for the Ba2 category, Moody's said.
The upgrade reflects the benefits from a strong market environment given the continued increase in global air traffic which has substantially supported performance improvements in both of MTU's divisions, the rating agency added.
The stable outlook reflects Moody's expectation for a stabilization of MTU's performance and credit profile around the current level, but also incorporates management challenges like the weakening US dollar rate, high research and development requirements to keep its share of OEM-led programs, and the potential for merger and acquisition activity to solidify MTU's market positions.
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