General Electric nearly collapsed in 2009 after the commercial paper market cratered. GE had to beg President Obama for a taxpayer bailout to protect the $140 billion commercial paper it could not repay. The company is in trouble again, as it teeters under $115 billion in debt amid dwindling cash flow:
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.
The stock hit $6.66 earlier this week – the lowest since the Financial Crisis. post-game interview. After GE’ bailout investors assumed it would get back to making money and being the industrial giant it had always been. Nothing could have been further from the case. Shock Exchange: How Inner-City Kids From Brooklyn Predicted the Great Recession and the Pain Ahead predicted GE would crater again with Immelt at the helm. However, nobody listened.