Friday, March 13, 2009

GE and GE Capital Lose Their 'AAA' Ratings: What Next for GE?

March 12: GE and its finance arm lost the top-level 'AAA' rating from S&P that they’ve held since 1956 as earnings are under immense pressure with exposed potential risks for the company as the deteriorating economy will produce mounting credit losses at GE Capital

S&P balanced the “excellent risk profile” of GE’s industrial businesses against the prospects of weaker earnings or a “modest net loss” at GE Capital. The one-level downgrade to ‘AA+’ with a “stable” outlook will affect the long-term debt. Under debt guarantees and covenants, GE would have had to post additional collateral if the ratings fell below AA-/Aa3 or A-1 and P-1

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