Moody's Downgrades General Electric (GE) One Notch
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Overnight, Moody's downgraded the senior unsecured debt rating of General Electric Company (NYSE: GE) to Aa3 from Aa2 and the senior unsecured rating of its wholly-owned finance subsidiary, General Electric Capital Corporation (GECC), to A1 from Aa2.
The downgrades result from the implementation of Moody's revised global rating methodology for finance companies, and reflect in particular the impact of GECC's higher risk profile on GE. Moody's believes the risk profiles of market-funded financial institutions, including GECC, are higher than was previously reflected in their ratings. While GECC has improved its liquidity and capital levels since the onset of the credit crisis, Moody's believes that, notwithstanding these positive steps, there remain material risks associated with the firm's funding model. Moody's therefore revised its view of GECC's standalone credit profile to Baa1 from A2.
The downgrade was mostly expected by the market.
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The downgrades result from the implementation of Moody's revised global rating methodology for finance companies, and reflect in particular the impact of GECC's higher risk profile on GE. Moody's believes the risk profiles of market-funded financial institutions, including GECC, are higher than was previously reflected in their ratings. While GECC has improved its liquidity and capital levels since the onset of the credit crisis, Moody's believes that, notwithstanding these positive steps, there remain material risks associated with the firm's funding model. Moody's therefore revised its view of GECC's standalone credit profile to Baa1 from A2.
The downgrade was mostly expected by the market.
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