The Situation

In October, Moody’s downgraded GE’s senior unsecured debt two notches from A2 to Baa1. The company’s bond yields and cost of funding have spiked since the downgrade and the loss of its commercial paper program. Peter Tchir of Academy Securities argued the market’s fears about GE’s bonds are overblown since about $26 billion of GE’s debt load was maturing in the next two years, mostly in 2020.

However, rising funding costs will likely have an immediate impact on GE Capital, the company’s financing arm. Once investors and the rating agencies parse through GE Capital’s negative net interest margin and GE’s overall credit quality, the stock could crater. Read more:

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