Late last week S&P downgraded Rolls Royce from investment grade to junk, citing “prolonged weak profitability”.
The perceived risk of investing and dealing with the company at the contract level increases greatly on the back of this news. This will affect many funds also, due to requirements surrounding holding investment grade bonds.
Prior to this they announced they would be cutting around 9000 job from their civil aerospace division, a further concussive blow. Though sentiment around this was mixed, think less mouths to feed, for lack of a better expression.
Particular attention must be paid to how this affects their manufacturing work for both Boeing and Airbus engines. This news come at a time where airlines are being hit incredibly hard with no let up.
(This in no way constitutes investment advice or a recommendation)
