Earlier this month, General Electric (GE) abandoned its use of commercial paper:

Once the largest borrower in the market, GE Capital is abandoning its use of commercial paper – debt with a maturity of up to 270 days. The move could add to its cost of financing, which is already under upward pressure after downgrades to the company’s credit rating. GE’s financial services division is instead becoming more reliant on bank lending and had available net credit facilities of $40.8B at the end of September.

I knew it was one of the biggest borrowers of commercial paper during the Financial Crisis. I also knew GE’s cost of funding would rise, but did not attempt to estimate the impact. Having its commercial paper pulled might have been the first signs of a run on the bank. It could also raise questions as to why GE would have $16 billion in loans backing $70 billion in debt. This could be devastating for GE.

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