General Electric Co. lost its AAA rating from Moody’s Investors Service for the first time in 40 years less than a week after GE said its finance unit would post a profit during the global recession and credit crunch.
Moody's now rates GE and its GE Capital finance unit Aa2, with a stable outlook, and leaves its short-term rating is unchanged at its top level of P-1. This comes after S&P downgraded GE’s top-notch “AAA” rating one tick to an “AA+” earlier this month.
Fairfield, Connecticut-based GE's stock has been pounded down about 75 percent over the past year, losing about $300 million in market capitalization noted that it does not expect anything from these rating changes despite a worsening economic environment.
However, the cut could make it more expensive for GE and its GE Capital finance arm to borrow money -- a key concern as that could in turn make it less profitable for GE Capital to lend out money.
“We are prepared to fund the company as a double A, but we will continue to run GE with the disciplines of a triple-A company,” said Jeff Immelt, the chief executive of General Electric,While no one likes a downgrade, Moody's, like S&P, confirmed the fundamental soundness of GE Capital.
GE Co. ended 2008 with $523.76 billion in outstanding short- and long-term debt, shares rose 87 cents to 9.33% at $10.41 on the New York Stock Exchange late Monday afternoon.