GE’s credit is under review for a down-grade by Moody’s
A downgrade could force General Electric to consider changes in capital allocation, including planned dividend levels
New York — General Electric’s (GE) credit rating is at risk of a significant downgrade as the beleaguered manufacturer grapples with a deepening slump in its power-equipment business. Moody’s Investors Service placed GE and its finance arm on review for downgrades that “may not be limited to one notch”, according to a statement on Tuesday by the ratings company. On Monday, Fitch put GE, which still has a significant financial business including a major aircraft lessor, on watch negative. The “dimmer prospects” for GE’s gas-turbine unit will likely have a long-term impact on the whole company’s cash flow and earnings prospects, Moody’s said. The ratings company currently rates GE as A2, which is five steps above junk. The prospect of a ratings cut — and the higher borrowing costs that come with it — adds to the challenges awaiting new CEO Larry Culp, who was named on Monday to succeed John Flannery in a surprise appointment. GE has lost more than $100bn in market value in the past ye...
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