Fitch Ratings has said it projects a 3 percent to 5 percent growth in the relevant areas of the global addressable defense market over the next three years with the U.S. budget to constitute 45 percent to 50 percent of the market.
Fitch said Monday it estimates the addressable global defense market is worth approximately between $400 million and $425 billion in 2016.
The credit rating agency raised its 2017 outlook for the global aerospace and defense sector to positive from stable as it forecasts an 8 percent rise in the delivery of large commercial aircraft and a 3 percent increase in related defense markets.
Fitch noted that it expects discretionary pension contributions for some U.S. defense contractors to increase over the next two to three years and cited continuing resolutions, budget caps and political disruptions as factors that could pose risks to its rating outlook for the defense sector.
Fitch released its outlook for the global A&D sector weeks after it forecast the Defense Department’s budget and overall defense spending to rise in the next four years in light of Donald Trump’s presidential win.
The statistical rating organization’s outlook also came days after the chief executives of Lockheed Martin (NYSE: LMT) and Raytheon (NYSE: RTN) told investors their expectations of the foreign military sales environment amid global oil price volatility and Trump’s statement during his campaign that U.S. allies should pay more for their own defense.
