Home MoneyFinancial Institutions Moody’s downgrades General Electric’s Debt after News to exit GE Capital

Moody’s downgrades General Electric’s Debt after News to exit GE Capital

by Yomna Yasser

Moody’s Investors Service downgraded on Friday General Electric Co.’s senior unsecured debt rating to A1 from Aa3, after GE unveiled a plan to exit most of its GE Capital finance arm, and sell $26.5 billion worth of office buildings and commercial real estate debt to Blackstone Group LP, Wells Fargo & Co. and other buyers.

The rating agency left its rating on GE Capital unchanged at A1.

The action “reflect our perception of a growing level of financial risk tolerance, in favor of equity holders and at the expense of creditors,” Moody’s Senior Vice President and lead analyst for GE Russell Solomon said in a statement.

“The pending GE Capital asset sales, with virtually all benefits inuring to equity owners, taken together with high share repurchase activity and a high dividend payout in recent periods, and the liquidity-consuming Alstom acquisition that is still pending, reflect a noteworthy shift by GE to more aggressive financial policies.” The rating outlook remains stable.

GE shares surged 4.7% in premarket trade, and are up 1.8% in the year so far, while the Dow Jones Industrial Average has gained 0.8%.

Source: MarketWatch

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