New York, November 30, 2012 -- Moody's Investors Service assigned a Baa3 rating to EUR600 million of new 4.375% senior unsecured notes due 2017 issued by Finmeccanica Finance SA, a wholly-owned subsidiary and guaranteed by Finmeccanica SpA. Net proceeds from the offering are expected to be utilized to partially repay existing notes due December 2013, either ahead of or upon their maturity, and for general corporate purposes. "The company is capitalizing on robust market conditions to enhance liquidity and extend its maturity profile on an economically attractive, cost effective basis while restructuring initiatives begun last year continue to be implemented," noted Russell Solomon, Moody's Senior Vice President and lead analyst for Finmeccanica. "We still expect asset dispositions yielding approximately EUR1 billion will be completed within the next few months, and note that successful placement of the new debt further bolsters the cushion afforded in terms of time and financial flexibility for management to fully implement its restructuring program, effect operational improvements, realize efficiency savings, boost margin performance, and ultimately restore key credit metrics to minimum requisite levels consistent with the company's investment-grade rating," added Solomon. The rating outlook remains stable.

Moody's Investors Service maintains the following ratings for Finmeccanica SpA:

Senior Unsecured (domestic currency) ratings of Baa3

Senior Unsecured MTN (domestic currency) ratings of (P)Baa3

Moody's Investors Service maintains the following ratings for Meccanica Holdings USA, Inc.:

BACKED Senior Unsecured (domestic currency) ratings of Baa3

Moody's Investors Service maintains the following ratings for Finmeccanica Finance S.A.:

BACKED Senior Unsecured (foreign currency) ratings of Baa3

BACKED Senior Unsecured (domestic currency) ratings of Baa3

BACKED Senior Unsecured MTN (domestic currency) ratings of (P)Baa3

RATINGS RATIONALE

The Baa3 long-term ratings reflect a baa3 Baseline Credit Assessment ("BCA") coupled with deemed moderate support from and moderate default dependence with the Italian government (Baa2 rating, negative outlook), in accordance with Moody's Government-Related Issuers (GRI) Methodology. Moody's rate Finmeccanica as a GRI, albeit with no explicit rating uplift from the underlying BCA at present. While performance remains weak, the rating outlook is stable as a result of expected improvements in the company's fundamental credit profile (i.e.; asset sales with corresponding debt pay-downs and subsequent deleveraging, and operating efficiencies garnered from ongoing restructuring initiatives) and implicit support from the Italian sovereign state. The government of Italy controls Finmeccanica's board and holds an approximate 30% economic interest in the company. Moody's expects that the same factors that have weighed on the Italian sovereign rating could also adversely affect Finmeccanica's business results over the intermediate term. This is because the group generates around 20% of its sales within Italy and a substantial portion are defense-related, with the government of Italy being a key customer and the Italian Ministry of Defence budget having fallen sharply this year. Compounding in-country difficulties is Finmeccanica's heavy exposure to defense spending levels for the whole of continental Europe, and the US and UK more broadly, which are also experiencing downward pressures.

Finmeccanica's key credit metrics remain very weak for the rating category, with profitability measures having been adversely affected by significant restructuring-related charges. Additionally, revenues have been declining in the Defense Electronics and Security division (DES, around one-third of total sales) owing to the challenging operating environment for defense contractors, particularly in the US.

Finmeccanica has proposed approximately EUR1 billion of asset sales (from civil-related activities and monetization of non-strategic partnerships) to be executed by the end of 2012, the proceeds from which would be applied to debt reduction. We believe these dispositions will be completed largely in accordance with stated targets, although market conditions may temper their timing, with closings more likely to occur in 2013. As well, valuations for the primary business lines targeted for disposal (Rolling Stock through Ansaldo Breda, as well as Finmeccanica's remaining stake in Ansaldo Energia) could be subject to execution risk.

While credit profile improvement relies heavily on successful execution of these asset sales at favorable valuations, even more important will be consistent improvement in operating performance, as particularly challenged by the expectation of continued difficult market conditions. Moody's recognizes the group's modest early-stage progress to-date under its comprehensive restructuring program, which should rationalize a more meaningful amount of costs and internal processes over time and thereby boost profits, with more tangible improvements in operating results expected in 2013.

Finmeccanica's fundamental business profile remains solid, with its large size (about EUR17 billion of revenue), high backlog (about EUR45 billion) and scale as one of the world's leading aerospace and defense contractors with important content on a wide range of high profile platforms constituting important rating considerations. Of particular note, the group's solid liquidity profile (particularly as enhanced by the current transaction) continues to afford the company time to effect the requisite restructuring. As is customary for the company, however, liquidity can be subject to added uncertainty given significant working capital volatility, particularly as it relates to the highly concentrated in-country cash collections that occur around fiscal year-end.

The stable rating outlook incorporates the company's strong liquidity profile and the benefit of ongoing support from Italy (Baa2 sovereign rating), countered against Finmeccanica's current weak positioning of its stand-alone credit profile and the challenge it faces in delivering needed operational improvements and executing asset disposals in view of its exposure to cuts in defense budgets across many European nations and in the US. Nonetheless, the stable outlook reflects our expectation that tangible improvements in the company's credit profile will be evidenced over the forward rating horizon.

Ratings could come under downward pressure if steady operational improvements are not evidenced, with demonstrated progress towards a return of operating margins to the 8% level or better and free cash flow approaching EUR400-500 million over the intermediate term, with margins in the Defense Electronics and Aeronautics divisions specifically trending towards low double-digit and high single-digit operating margins, respectively. In addition, Moody's would consider further negative rating action(s) if targeted asset dispositions (and debt pay-downs with resultant asset sale proceeds) are not successfully completed largely in accordance with stated objectives over the near-term, with ensuing leverage trending towards 3 times or lower on a Moody's-adjusted Debt-to-EBITDA basis over the intermediate term. Any unexpected adverse developments with respect to the company's liquidity profile, including curtailment of revolver availability and/or meaningful reduction of excess cash balances could also impose a further negative rating bias.

Although it is unexpected over the immediate rating horizon, ratings could warrant consideration for potential upgrade upon evidence of meaningful progress in the company's restructuring program, coupled with stabilization of the Italian sovereign rating. Ratings could be lifted if Finmeccanica's consolidated operating margin is sustained above 10%, returns on capital (EBITA-to-Average Assets) improve to 10% or better, and Retained Cash Flow-to-Debt approaches the high-20% range or more. These results are indicative only and would have to be sustainable and accompany maintenance of a strong liquidity profile and a minimum two-year backlog of firm orders.

The principal methodology used in rating Finmeccanica was the Global Aerospace and Defense Industry Methodology published in June 2010. Other methodologies used include the Government Related Issuers Methodology published in July 2010. Please see the Credit Policy page on www.moodys.com for a copy of these methodologies.

Headquartered in Rome, Italy, Finmeccanica SpA is one of Italy's largest industrial conglomerates and receives approximately half of the country's annual defense outlays. Finmeccanica is concentrated in the defense electronics/systems and aerospace (helicopters, aircraft) markets, with interests also in the transportation (train signaling systems), space and energy sectors. The company reported revenues approximating EUR17 billion during the 12 months ended 30 September 2012.

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Russell Solomon Senior Vice President Corporate Finance Group Moody'sInvestors Service, Inc.250 Greenwich StreetNew York, NY 10007 U.S.A. JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653Michael J. Mulvaney MD - Corporate Finance Corporate Finance Group JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653 Releasing Office: Moody's Investors Service, Inc.250 Greenwich StreetNew York, NY 10007 U.S.A. JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653(C) 2012 Moody's Investors Service, Inc. and/or its licensors and affiliates (collectively, "MOODY'S"). All rights reserved.

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