NEW YORK, NY--Standard & Poor's Ratings Services has revised the outlook on General Electric Capital Corp. (GECC) and all related entities to negative from stable and affirmed the 'AAA' long-term and 'A-1+' short-term counterparty credit ratings.
The outlook revision on GECC's parent, General Electric Co. (GE) and accordingly on GECC, reflect in part concerns relating to GECC. (Please see the related release on GE, also published today.)
"GECC's earnings deterioration in 2009 and 2010 could be greater than we previously assumed," said Standard & Poor's credit analyst Scott Sprinzen (top right photo).
"GECC's earnings deterioration in 2009 and 2010 could be greater than we previously assumed," said Standard & Poor's credit analyst Scott Sprinzen (top right photo).
"The outlook revision reflects the continuing risks posed by GECC's reliance on confidence-sensitive wholesale funding, despite the benefits of temporary U.S. government support programs and of management's ongoing efforts to reduce GECC's reliance on commercial paper, strengthen near-term liquidity, downsize the asset base, and strengthen capital.
'The outlook on
GE and GECC is negative, indicating that we believe there is at least a one-in-three possibility of a downgrade within the next two years.
'The outlook on
GE and GECC is negative, indicating that we believe there is at least a one-in-three possibility of a downgrade within the next two years. "We believe GECC will experience significantly higher credit costs in 2009 compared to those in 2008 and sharply lower earnings from its real estate operations.
If we thought net earnings in 2009 would be significantly lower than management's current forecast (i.e., net income of $5 billion), we could reassess the rating.
Our view of GECC's credit profile would be adversely affected if, in our opinion, GECC were not on track toward meeting management's stated targets for, increased liquidity, reduced financial leverage and reduced reliance on commercial paper.
Conversely, GECC's credit profile would benefit if its earnings recovered significantly in conjunction with demonstrating progress in lowering the risk of its funding and capitalization.
Media Contact:
Jeff Sexton, New York (1) 212.438.3448, jeff_sexton@standardandpoors.com
Analyst Contacts:
Scott Sprinzen, New York (1) 212.438.7812
Rian M Pressman, CFA, New York (1) 212.438.2574
Jeff Sexton, New York (1) 212.438.3448, jeff_sexton@standardandpoors.com
Analyst Contacts:
Scott Sprinzen, New York (1) 212.438.7812
Rian M Pressman, CFA, New York (1) 212.438.2574
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