General Electric Co. (GE)'s credit rating was cut by Moody's Investors Service to Aa3 from Aa2 and its wholly-owned finance unit, General Electric Capital Corp. or GECC, was downgraded to an A1 rating from Aa2. Moody's affirmed the Prime-1 ratings of both companies. The downgrades conclude a review begun March 19 after Moody's revised the criteria for ratings of financial companies including GE Capital. Moody's said the cuts reflect "the impact of GE Capital's higher risk profile on GE."
Moody's expects 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.
by RTT Staff Writer
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