Moody’s has said that its review for possible downgrade of the long-term ratings of General Electric’s “Aaa” senior unsecured and General Electric Capital Corporation “Aaa” senior unsecured continues even after the dividend cut. Moody’s said the move will reduce the aggregated dividend by about $9 billion to about $4.5 billion.
The report says that the reduction in the dividend will address some of the concerns over the stress upon GE. But the report also states that the review for possible downgrade continues.
The initial January 27 report centered on GECC’s asset quality, the industrial cash flows, and continued tight credit markets.
In short, there is really nothing new here. We still think a shot has been fired across the bow at G.E. by the ratings agencies. We at 24/7 Wall St. still consider all of this as part of a long process of a “Downgrade-Lite Call” from the agencies. Maybe there is some good news here right now. Technically, GE is still officially Triple-A.
Jon C. Ogg
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