Obbligazioni societarie GENERAL ELECTRIC -operativo emissioni

[Imark]

Le considerazioni di Moody's circa il creditwatch per una possibile riduzione del rating di General Electric.

Precisato che i bond emessi con garanzia statale non sono intaccati da una eventuale riduzione di rating, a determinare la messa sotto osservazione dei ratings è la incertezza circa la qualità degli asset di GECC e la capacità di generazione di utili del gruppo, anche sulla scorta della revisione al rialzo delle stime di perdite su crediti per il 2009 formulate da GECC.

La situazione paventata da Moody's per il 2009 pone il gruppo dinanzi all'alternativa fra ridurre il dividendo di GE o subire verosimilmente il taglio del rating.

GE, GECC Aaa LONG-TERM RATINGS REVIEWED FOR POSSIBLE DOWNGRADE

PRESS RELEASE

New York, January 27, 2009 -- Moody's Investors Service placed the long-term ratings of General Electric Company (Aaa senior unsecured) and General Electric Capital Corporation (GECC; Aaa senior unsecured) on review for possible downgrade. The firms' Prime-1 short-term ratings were affirmed. The review also has no impact on the FDIC-guaranteed debt issued by GECC, which remains at Aaa with a stable outlook.

Moody's said the review for downgrade is based primarily upon heightened uncertainty regarding GECC's asset quality and earnings performance in future periods.


General Electric Capital Services (GECS, GECC's immediate parent) recorded a $1.5 billion consolidated pre-tax loss from continuing operations for the fourth quarter of 2008 on higher credit and other charges. Additionally, the firm revised upward its estimate for credit losses in 2009.

Moody's is concerned that deepening global economic weakness could further compromise GECS' asset quality, potentially jeopardizing its ability to meet earnings objectives while also maintaining high earnings quality.

In its December 2008 press release, Moody's identified the following factors as important credit considerations for GE and GECC: 1) a downsizing of GECC and a reduction in its reliance on confidence-sensitive short-term funding while maintaining solid earnings and asset quality; (2) GECC achieving earnings of $5 billion in 2009 and each of the next several years; (3) a restoration of the GECS dividend to GE to historical levels by 2010; (4) generation of industrial cash flow from operations that exceeds $16 billion in 2010; (5) a suspension of share buybacks until these expectations are realized; and (6) the potential to reduce the stress on GE's industrial free cash flow either through the resumption of more significant dividends from GECS to GE or through the reduction of the GE external dividend.

Moody's said that its review will focus on each of these factors in light of weakening market conditions.

GECS Earnings Stability and Dividend Ability Key Focus

During its review, Moody's will consider potential ongoing challenges to, and increasing volatility in, GECS' earnings in an exceptionally difficult operating environment. Given this uncertainty around earnings, Moody's will also reassess GECS's ability to restore its dividend to GE to historic levels in the intermediate term.

"Historically, a hallmark of the GECC credit has been its ability to consistently create capital," Moody's analyst Mark Wasden said.
During its review, Moody's will also reevaluate its expectations of GE industrial cash flow in 2009 and 2010. The combination of potentially reduced industrial cash flows and GECS dividends would place more stress on the company's ability to meet external dividend payments through operating cash flows.

Moody's expects that GE's cash flow from operations, including the dividend from GECS, could decline below prior expectations of about $16 billion in 2009. This expectation considers: 1) Moody's view that the decline in GECS' 2009 net income could be more significant than originally anticipated as a consequence of accelerated and deeper deterioration of asset quality; 2) the increasingly challenging business conditions in GE's long cycle and short cycle industrial operations; and 3) a likely reduction of progress payments received by GE as a result of the slowdown in infrastructure orders worldwide, although this may be offset by working capital reductions.

Absent a timely restoration of adequate dividends from GECS, the continuation of the current high level of GE common dividends may not be possible from internally generated funds.

"Incremental borrowing or reduction of existing liquidity levels to meet the dividend would be uncharacteristic for a firm with a Aaa rating," said Moody's analyst Richard Lane.

In the fourth quarter, GECS' rate of net charge-offs in continuing businesses weakened to 1.36% from .87% in the third quarter. Non-earning assets also increased to 2.12% from 1.72%, indicating mounting asset quality weakness. In its earnings announcement, management said its estimate of 2009 credit loss provisions had increased to $10 billion -- $1 billion higher than communicated in December 2008 -- though it also affirmed its framework for achieving 2009 earnings of $5 billion.

"GECS' fourth quarter earnings were positive because of significant tax benefits," said Moody's Wasden. "The firm can probably compensate for some portion of higher credit costs by improving operating efficiency. But we believe the individual components of earnings are important. We therefore look for sustainable, high quality earnings as a measure of the firm's success."

Progress Noted on Liquidity, Capital Position

Positively, during the fourth quarter, GE management met interim targets to improve the liquidity and capital positions of GECS and GECC.

Outstanding commercial paper (GECS) declined to $72 billion from $88 billion at the end of the third quarter, and the company affirmed its intention to reduce CP balances to $50 billion by the end of 2009.

As a consequence of this reduction, committed bank line coverage of commercial paper balances improved to 83% from 71% at the end of the third quarter, reflecting good progress towards the company's objective of 100% coverage by the end of 2009. Management also continued to diversify funding sources to include additional deposits and other alternatives, which increased by $25 billion in 2008 with continued growth slated for 2009.

GECC has also utilized the U.S. Federal Reserve's Commercial Paper Funding Facility (CPFF) and the FDIC's Temporary Liquidity Guarantee Program (TLGP). Though temporary in nature, Moody's believes these programs have had a stabilizing effect on GECC's short-term liquidity, while the company shifts its funding profile to be less reliant on commercial paper.

GECS ended 2008 with cash of $36 billion, the result of fourth quarter pre-funding of about $13 billion of 2009 planned term debt issuance of $45 billion, a $5.5 billion capital injection from GE, and higher retained cash flow due to the lower dividend payout to GE. Additionally, GECC reduced its leverage during the quarter.

Moody's believes the measures taken by management and the firm's access to government support programs have ameliorated near-term liquidity risks at the firm and have also reduced the potential near-term need for GE support.

GE Industrial Business Likely to Soften

Moody's also notes that GE's industrial businesses retain strong competitive positions, and should demonstrate improved performance once the economy rebounds. Additionally, the company's $172 billion of infrastructure equipment and service backlog provides important visibility into future revenue. Recent initiatives to reduce costs and enhance cash flow generation should also help to support near term operating performance.

"Nevertheless, the global economic downturn and continued tight credit market conditions create some strong headwinds for the company's long cycle Energy, Aviation, Transportation, and Healthcare businesses," said Moody's Lane. "Reduced order flow and deferral or cancellation of existing orders could be a more significant concern in the coming year."
Performance of the company's short cycle businesses (appliances, lighting, and local television stations) continue to exhibit weakness and could see greater earnings erosion during 2009. The impact of these short cycle businesses on GE industrial's overall performance, however, should be modest as they represent less than 5% of industrial operating profit.

 

[negusneg]

Immelt Stakes His Legacy on GE’s Ability to Keep Dividend, Aaa

By Rachel Layne

Jan. 28 (Bloomberg) -- Jeffrey Immelt will know within three months whether his eventual mark on General Electric Co. can include the claim he led it through the deepest economic crisis in a generation with its dividend and Aaa credit rating intact.
“This will be a legacy thing,” said Bill Batcheller, who co-manages $700 million in assets, including GE shares, at Butler Wick & Co. in Youngstown, Ohio. “He’s doing what he can do to protect both of these items. Immelt’s been trying. He can’t control the economy.”
Moody’s Investors Service yesterday said it’s evaluating whether to lower the long-term debt rating for GE and GE Capital, a review that takes about 90 days. Immelt, who took over as chief executive officer in September 2001, is staking his reputation and GE’s on squeezing enough profit from jet engines, power equipment and finance to justify the Aaa and still pay $13.4 billion in dividends to shareholders this year.
Investors may not share his faith. GE fell 56 percent in 2008, erasing $204 billion in market value, as the company twice missed Immelt’s profit targets. The stock closed at the lowest price since 1996 on Jan. 23, the day he reported lower fourth- quarter profit and repeated his dividend-and-rating mantra. GE last week outlined worsening conditions at parts of GE Capital while leaving the unit’s $5 billion profit goal unchanged since a Dec. 16 shareholder meeting.
“At this point GE’s credibility certainly has to be coming under closer scrutiny,” said Nick Heymann, an analyst at Sterne Agee & Leach Inc. in New York who has covered GE for more than 25 years. He has a “sell” rating on the stock. “It was unnerving to investors that just between the middle of December and when they reported results that you would have such large adjustments in the 2009 operating framework.”

Cash for Dividends

GE said in December it may generate as much as $16 billion in cash this year after capital expenses. Most would come from the sale of goods like jet engines and power turbines, plus $500 million from a reduced payment GE Capital makes to the parent company, and about $2 billion from other sources. That would be more than enough to pay the $1.24-a-share dividend.
Moody’s is examining whether that kind of cash generation is sustainable over years and whether keeping the dividend saps cash that GE should put to other uses. Specifically, Moody’s wants GE Capital to earn enough to restore a larger payment to the parent company in 2010. If that doesn’t look like it will happen, Moody’s says it can’t justify the top-level Aaa.
“One of the elements we’re considering in the review is in terms of the stress that the external dividend puts on the industrial cash flow,” Richard Lane, the Moody’s analyst overseeing GE, said in an interview. That “is not the pre- eminent issue, but it is an important issue in the ratings.”

Percentage of Profit

Under GE’s business model, the finance unit gives the parent a percentage of profit that’s redistributed to all of GE’s businesses. In September, GE allowed GE Capital to cut its contribution to 10 percent of the unit’s profit from 40 percent.
Moody’s is reviewing long-term debt at GE and GE Capital that is not backed by the Federal Deposit Insurance Corp. The service affirmed GE’s top commercial paper ratings.
GE said in a statement it will “work constructively with Moody’s on its review” over the next few months. “Our objective is to maintain our Triple-A rating, but we do not anticipate any major operational impacts should that change.”
Immelt, 52, says he and GE’s board consider paying the dividend a good way to return value to shareholders. Some 40 percent of GE’s holders of its 10.5 billion outstanding shares are individual investors. “It has just been the judgment that this has been the most investor-friendly use of this capital,” the chief executive said last week.

GE’s Bonds

While Immelt says he would like to protect both the rating and the dividend, bonds have traded the past six years as though GE was rated below Aaa, according to Moody’s implied ratings. The bonds imply GE should be ranked five steps lower at A2.
GE’s 5.25 percent notes due in 2017 rose 1.2 cents to 98 cents on the dollar to yield 5.5 percent at 4:41 p.m. yesterday in New York, down 0.2 cent from its intraday high, according to Trace, the bond-pricing service of the Financial Industry Regulatory Authority.
These days “it’s not as essential to have the triple A to get your funding,” said Richard Hofmann, who follows financial companies for CreditSights Inc. in New York. “It is an important psychological level, and also it could regain its importance” once credit markets return to normal.

Raising Debt

GE has raised 64 percent of the $45 billion in long-term debt it plans to issue this year. About $24.5 billion of that is insured by the FDIC. About 83 percent of Aaa companies put on a review for downgrade are cut within a year, according to Moody’s.
Moody’s also gives an Aaa stamp to Automatic Data Processing Inc., Exxon Mobil Corp., Johnson & Johnson, Microsoft Corp. and Berkshire Hathaway Inc. The only non-financial, non-government borrower Moody’s rates Aaa outside the U.S. is Toyota Motor Corp.
Immelt is reaching the point where he has to make a decision between losing either the rating or the dividend, Jeffrey Sprague, a Citigroup Inc. analyst in Stamford, Connecticut, said in a note to clients after yesterday’s announcement.
Sprague said that while he would prefer that Immelt reduce the dividend rather than allow the Aaa to slip, it’s important that the matter be resolved. “While a cut of the dividend and/or rating may create near-term pressures, ultimately removing these overhangs should be good for the stock,” Sprague wrote.
To contact the reporter on this story: Rachel Layne in Boston at [email protected].
Last Updated: January 28, 2009 00:08 EST

 

[negusneg]

Anche JPMorgan torna su dividendo e rating


GE’s AAA Rating ‘Unsustainable’, JPMorgan’s Tusa Says (Update2)


By Rachel Layne and Edmond Lococo

Feb. 6 (Bloomberg) -- General Electric Co.’s AAA rating is “unsustainable” and the company will probably have to cut its dividend, said Stephen Tusa, a JPMorgan Chase & Co. analyst, as he lowered his price target on the shares to $9 from $13.

Both GE’s industrial and capital finance units missed JPMorgan’s estimates in the fourth quarter, suggesting his projection for the Fairfield, Connecticut-based company this year and next are still too high, Tusa wrote in a note to clients today. He cut his per-share profit estimate for 2009 and 2010.

“We have decided to take an axe to our estimates to get to a point where we can truly answer the question of ‘how bad could it get?’” the New York-based analyst wrote. “We think that the AAA and the dividend issues look too large as shoes yet to drop.” Tusa rates the shares “neutral.”

Chief Executive Officer Jeffrey Immelt yesterday said GE generates enough cash to maintain its shareholder dividend this year and that he’s prepared to run GE as an AA rated company amid economic conditions that are the worst since 1973 and may descend into depression. The stock reached its lowest price yesterday since Nov. 8, 1995.

Moody’s Investors Service said Jan. 27 it’s evaluating lowering the long-term debt rating for GE and GE Capital, a review that typically takes about 90 days. Standard & Poor’s said in December that GE had a one-in-three chance of losing its top rating over the next two years, and changed its outlook to “negative” from “stable.”

General Electric rose 15 cents to $11 at 10:43 a.m. in New York Stock Exchange composite trading. The shares had fallen 68 percent in the past year before today.

Change Catalyst

GE cut its forecast twice last year, surprising investors and analysts first in April after a years-long track record of rarely varying from analyst estimates by more than a penny. In December, the company announced it would discontinue giving per- share forecasts starting this year. Immelt took over for Jack Welch in September, 2001.

“Former CEO Welch built a culture of earnings management that was unsustainable,” Tusa wrote. “AAA loss/dividend cut should be the catalyst for change, a longer-term positive.”

Tusa projects 2009 earnings per share will be 85 cents, instead of the $1.20 he previously estimated. Next year, profit will be 70 cents instead of $1.10, he wrote. The average estimates of at least 11 analysts surveyed by Bloomberg was for profit of $1.29 this year and $1.34 in 2010.

GE said Jan. 23 there were no changes in the board’s plan to pay the $1.24 annual dividend and that the company had already disbursed its first-quarter payment as part of that commitment. The dividend is yielding about 11 percent.

To contact the reporters on this story: Rachel Layne in Boston at [email protected]; Edmond Lococo in Boston at [email protected].
Last Updated: February 6, 2009 10:45 EST

 

[dachi]

Obbligazione GE garantita usa

in banca mi hanno consigliato questo titolo:
xs0405666941 e' una ge che mi dicono sia garantita del tesoro usa.
costa 103 e ha una cedola di 4 scade il 15 /6 /2012
che faccio mi fido?

 

[dachi]

ho aperto il bloomberg, alla voce collateral TYPE mi dice : FDIC guaranted, qualcuno sa che vuol dire?

 

[Imark]

ho aperto il bloomberg, alla voce collateral TYPE mi dice : FDIC guaranted, qualcuno sa che vuol dire?

Vuol dire appunto che gode della garanzia di un organismo federale, la FDIC...

 

[yellow]

10.02.09 19:10 - Ge: inietta 9,5 mld usd in div. Finance per ridurre debito
NEW YORK (MF-DJ)--General Electric ha deciso di iniettare circa 9,5 miliardi di dollari nella sua divisione finanziaria,

Ge Capital, riducendo cosi' l'indebitamento della stessa.

La manovra, spiega la stessa General Electric, ridurra' al rapporto di 6 a 1 la proporzione tra debito e azioni della divisione Ge Finance;
un target che il gruppo prevedeva di raggiungere alla fine del 2009.

La manovra, ha spiegato Ge, servira' a rassicurare gli investitori sulla solidita' del gruppo.

 

[reno]

ge cap

Buona giornata, vorrei chiedere un parere su questo xs0272770396 - TF 4.125 scad.2016 rendita netta 4,755 al prezzo di 92.05 (calcolo di intesa)
Ringrazio

 

[samantaao]

Buona giornata, vorrei chiedere un parere su questo xs0272770396 - TF 4.125 scad.2016 rendita netta 4,755 al prezzo di 92.05 (calcolo di intesa)
Ringrazio

personalmente x i titoli lunghi scelgo emittenti molto solidi, soprattutto btp

il rendimento è piuttosto buono ma prima di acquistarlo penso che solo tu possa giudicare i seguenti aspetti:
-la durata è lunga, si adatta alla diversificazione del ptf?
-credi nell'emittente e soprattutto che non abbia altri sbandamenti? (magari sei un cassettista pure tu, ma ti assicuro che quando le guardo nel mio ptf a -15% mi rattristo parecchio)

 

[amexroma]

personalmente x i titoli lunghi scelgo emittenti molto solidi, soprattutto btp

il rendimento è piuttosto buono ma prima di acquistarlo penso che solo tu possa giudicare i seguenti aspetti:
-la durata è lunga, si adatta alla diversificazione del ptf?
-credi nell'emittente e soprattutto che non abbia altri sbandamenti? (magari sei un cassettista pure tu, ma ti assicuro che quando le guardo nel mio ptf a -15% mi rattristo parecchio)

alla fine sono entrato anch'io in GE, come cassettista, ma il -15% che citi a quale bond ti riferisci, quello del 2016? con una scdenza così lontana forse è normale che balli un poco...