General Electric (GE) Falls Another 7%, Nears $15/Share

Shares of General Electric Co. (NYSE: GE) are down another 7% today, closing in on the 'unimaginable' $15 level. GE fell 8.5% yesterday and is down 27% in the last month. Today is the fifth straight down day for GE.

Yesterday, GE announced that the FDIC is set to provide deposit insurance for up to $139 billion of US bonds.

Commenting on this today, an analyst at Deutsche Bank said this is positive and negative. Here is what they said:

Positive: "positives are that GE has found a mechanism that will almost certainly reduce the cost of refunding its debt maturities, and this could be worth 300-400bps. It also further lowers the probability of a liquidity event, without conversion to a bank holding company or direct equity injections. Therefore, GE has retained a greater degree of strategic and operational flexibility, not least with regard to dividend policy."

Negative: "Of course there is a cost to this insurance coverage at 75bps, which means that the theoretical maximum cost of coverage would be $1bn (~6-7c/share) and this is one of the reasons why the TARP banks have not yet opted for this mechanism. Additionally, it does amplify the stresses that remain in the debt capital markets, which may surprise some equity investors that were becoming more comfortable with GE Capital's funding situation. As such, it would not surprise us if GE were more inclined to delever the GE Capital balance sheet more aggressively than publicly guided (6x debt/equity target by end-2009)."

UPDATE: GE has said that it stands by comments made on Sept. 25 that it will maintain its dividend through 2009.

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