Credit rating agencyÂ Fitch RatingsÂ expects theÂ Defense Department‘s budget and overall defense spending toÂ increase in the next four years on Donald Trump’s election as president with the cybersecurity environment andÂ U.S. Navy asÂ key potential beneficiaries.
Fitch said Wednesday it improved its credit view of theÂ U.S. defense sectorÂ on top of its pre-election forecast of increases toÂ government spending over the next five years.
Fitch added theÂ Department of Homeland SecurityÂ could also see spending increases with border security as a focus area and a potentialÂ source of new contracts for defense-oriented companies, while NASA could also receive a budget boost.
The companyÂ bases its defense outlook onÂ expectations that current spendingÂ caps under the Budget Control Act will be removedÂ under Trump’s administration.
Another continuing resolution could extend into January but temporary CRs will be less of a risk than in the past decadeÂ with a Republican president and GOP-controlled Congress, Fitch noted.
Divisions within the GOP, small Republican majorities in both legislative houses, Trump’s outsider status, Senate rules are factors Fitch advised investors to watch for in the progress of defense measures through Congress.
The incoming administration’s views on trade could impact overseas defense campaigns and place U.S.-based contractors at a disadvantage in terms of international sales opportunities, Fitch said.
FitchÂ added key defense and security developments in the next months includeÂ coordination among Republicans; appointment ofÂ aÂ new defense secretary; andÂ submission of the fiscal 2018 budget request.