GE Loses AAA Credit Rating


An article at Huffington Post announced that General Electric lost its top AAA credit rating.  GE has been struggling with credit issues for a while now, and the new AA+ credit rating (down from AAA) means it will be more expensive for GE to raise money.  From the article:

The credit rating agency lowered GE’s long-term debt ratings to ‘AA+’ from ‘AAA’ Thursday, a one notch reduction that markets had long expected. The move means it will be more expensive for GE to raise money in the credit markets.

Company shares rose $1.01, or nearly 12 percent, to $9.50 in morning trading after the announcement. Shares had lost about half their value this year, pushed down by investors frightened by the grim outlook for GE’s lending arm, GE Capital.

Many analysts had expected a much deeper ratings cut, given GE Capital’s struggles with rising loan losses and fears that it more write-downs are looming. And while GE has said defending its coveted credit rating was a priority, CEO Jeff Immelt has recently said he was prepared to fund the company at a lower level.

“I don’t believe GE is surprised to see this,” said Dilip Sarangan, an analyst with Frost & Sullivan.

GE’s capital division, if it were operating solo, would have been given a much lower “A” rating – but thankfully that’s not the case.  Jeff Immelt, GE’s CEO, said that they will be maintaining the discipline of a “AAA” rated company.

Check out the original article here.

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