Embraer Upgraded by Fitch and Moody’s in Five Days
BRAZIL · EMBRAER
Key Facts
- —Who is Embraer The Brazilian aircraft manufacturer, third largest in the world after Airbus and Boeing. It builds regional jets and military transports.
- —What happened Two credit rating agencies upgraded it within five days of each other.
- —The upgrades Fitch moved it from BBB− to BBB on 9 September. Moody’s moved it from Baa3 to Baa2 on 14 September.
- —What that means Cheaper borrowing. A higher rating lowers the interest a company pays on its debt.
- —A detail worth noting Embraer was already investment grade at all three agencies. These upgrades move it further inside, not across a threshold.
- —The order book US$34.5 billion at 30 June, up 16% on the year and the seventh consecutive record.
Two rating agencies upgraded Embraer in the same week. Both then told the market not to expect more soon.
Fitch raised Embraer from BBB− to BBB on 9 September and Moody’s raised it from Baa3 to Baa2 on 14 September. Both agencies moved their outlook from positive to stable at the same time.
Two Upgrades, Five Days Apart
Fitch acted first, on 9 September, moving Embraer from BBB− to BBB.
Moody’s followed on 14 September, from Baa3 to Baa2. The two scales are equivalent at each step.
Both agencies also moved their outlook from positive to stable.
An outlook change in that direction is not a warning. It says the agency has done the upgrade it was signalling and does not expect another in the near term.
Already Investment Grade
Embraer held investment-grade ratings at all three major agencies before this week.
BBB− and Baa3 are the lowest rungs of investment grade. BBB and Baa2 are one step up.
Which funds can hold the debt turns on that step. Many mandates require a cushion above the investment-grade boundary rather than a position on it.
Reports describing Embraer as having regained investment grade this month describe something that happened earlier.
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What Each Agency Cited
Moody’s pointed to the strength of the order book and the improvement in operating performance.
Fitch cited liquidity. Its reasoning turned on the company’s cash position and its ability to fund deliveries without new borrowing.
Those are different arguments reaching the same conclusion, which is the more persuasive pattern.
Neither agency expects a further move soon, which is what the stable outlook says.
The Backlog
Embraer reported a firm order backlog of US$34.5 billion at 30 June 2026.
That is up 16% year on year and the seventh consecutive quarterly record. The figure is the company’s own.
The backlog covers commercial jets, executive aviation, defence and services. The E2 family of regional jets is the largest single component.
A backlog of that size represents several years of production at current rates. That is what gives a rating agency confidence about cash flow.
Why It Matters to Brazil
Embraer is Brazil’s largest exporter of manufactured goods by value. Few Brazilian industrial companies compete at the top of a global market.
It employs around 20,000 people, concentrated in São José dos Campos in São Paulo state.
Its cost of capital determines how much it can invest in the next aircraft programme. That decision sets the company’s position a decade out.
Cheaper debt also matters because aircraft manufacturing is working-capital intensive. Aircraft are built long before they are paid for.
The Wider Market Context
The upgrades arrived in a week when US ten-year yields touched 5%, the highest since July 2007.
Rising benchmark rates raise borrowing costs for every issuer. A rating upgrade partially offsets that.
Brazilian corporate issuers are also constrained by the sovereign ceiling, which limits how far a company can be rated above its country.
Embraer is now closer to that ceiling than most Brazilian companies get.
What to Watch
Third-quarter deliveries, which Embraer reports in October and which determine whether the backlog record continues.
S&P, which has not moved and holds the third of the three major ratings.
Any new aircraft programme announcement, the natural use for cheaper capital.
And the Brazilian sovereign rating, which sets the ceiling Embraer is approaching.
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Frequently Asked Questions
Who upgraded Embraer?
Fitch on 9 September, from BBB− to BBB. Moody’s on 14 September, from Baa3 to Baa2.
Was Embraer junk-rated before?
No. It was already investment grade at all three major agencies. These upgrades move it one step further inside.
Why did the outlooks change to stable?
Both agencies had positive outlooks and have now made the upgrade those outlooks signalled. Stable means no further move is expected soon.
How big is the order backlog?
US$34.5 billion at 30 June 2026, up 16% year on year and the seventh consecutive record. The figure is the company’s own.
What did Fitch cite?
Liquidity, meaning the company’s cash position and its ability to fund deliveries without new borrowing.
Why does the rating matter?
It lowers the interest Embraer pays on debt. That matters in a business where aircraft are built long before they are paid for.
Sources: Fitch Ratings, Moody’s Investors Service, Embraer investor relations, Reuters, Valor Econômico.
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