Defense Industry Access to Capital Markets
November 30, 2011
Private companies rely on cash raised from capital markets to finance ongoing operations as well as new investments in long-term assets (such as facilities and equipment), independent research and development, and retirement of old debt. Despite the unique role defense companies play in U.S. national security, they are as beholden to these capital markets as any other private firm. Therefore, the ability of defense companies to access to capital markets shapes the depth and breadth of the U.S. defense industry and the capabilities it has to offer, as well as the cost of these capabilities to the Department of Defense. It is therefore important to understand the underlying financial metrics that drive access to – and cost of – capital for defense firms.
This paper presents the data and findings of research conducted on defense companies’ access to capital markets during the period 1990-2010.