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Commento su equity credit all'emissione
New York, November 07, 2007 -- Moody's Investors Service assigned an Aa1 rating to General Electric Capital Corporation's ("GECC") $2.5 billion issuance of 60-year subordinated debentures, maturing in November, 2067. The outlook for the rating is stable.
The rating of the securities reflects GECC's underlying Aaa senior rating as well as the relative priority of claim the securities have in GECC's capital structure.
In Moody's view, the securities have sufficient equity-like features to qualify for Basket C treatment for the first ten years (50% debt treatment and 50% equity benefit) for financial leverage purposes (for additional reference, see Moody's February 2005 publication "Refinements to Moody's Tool Kit: Evolutionary not Revolutionary"). From the end of year ten through year 30 the securities will decline to a basket 'B' designation and will further transition to a basket 'A' treatment from the end of year 30 through maturity. The basket allocation is based upon the following rankings for the three dimensions of equity:
i. No Maturity -- Strong. The securities have a 60 year final maturity and are callable at par after year ten. According to a binding replacement provision (a Replacement Covenant in favor of holders of GECC's 4.125% Fixed Rate Subordinated Notes Due September 19, 2035, in amount totaling €750,000,000), GECC may redeem the securities only with the proceeds of a new capital issuance of either common stock and common stock rights, mandatorily convertible preferred stock and subordinated debt exchangeable into equity, or subordinated securities that conform to certain predetermined limits with respect to maturity, deferral, and replacement. GECC will provide a legal opinion supporting the enforceability of the Replacement Covenant.
ii. No Ongoing Payments -- Weak. Payments under the securities may be deferred by GECC at its option for up to ten years. Interest payments are cumulative during the deferral period. If distributions on the securities are deferred, GECC may not redeem or pay distributions on pari passu or junior securities.
iii. Loss Absorption -- Moderate. The subordinated debentures are senior in ranking only to preferred stock and common stock and are pari passu with other series of debt issued under the indenture and with trade creditors. The securities do not cross-default with other debt and investors have substantially limited rights regarding the ability to accelerate principal.
GECC, based in Stamford, Connecticut, is the legal entity which holds GE's investments in the commercial finance and consumer finance businesses. For the nine months ended September 30, 2007, GECC reported earnings of $6.5 billion and total assets of $599.9 billion.
New York, November 07, 2007 -- Moody's Investors Service assigned an Aa1 rating to General Electric Capital Corporation's ("GECC") $2.5 billion issuance of 60-year subordinated debentures, maturing in November, 2067. The outlook for the rating is stable.
The rating of the securities reflects GECC's underlying Aaa senior rating as well as the relative priority of claim the securities have in GECC's capital structure.
In Moody's view, the securities have sufficient equity-like features to qualify for Basket C treatment for the first ten years (50% debt treatment and 50% equity benefit) for financial leverage purposes (for additional reference, see Moody's February 2005 publication "Refinements to Moody's Tool Kit: Evolutionary not Revolutionary"). From the end of year ten through year 30 the securities will decline to a basket 'B' designation and will further transition to a basket 'A' treatment from the end of year 30 through maturity. The basket allocation is based upon the following rankings for the three dimensions of equity:
i. No Maturity -- Strong. The securities have a 60 year final maturity and are callable at par after year ten. According to a binding replacement provision (a Replacement Covenant in favor of holders of GECC's 4.125% Fixed Rate Subordinated Notes Due September 19, 2035, in amount totaling €750,000,000), GECC may redeem the securities only with the proceeds of a new capital issuance of either common stock and common stock rights, mandatorily convertible preferred stock and subordinated debt exchangeable into equity, or subordinated securities that conform to certain predetermined limits with respect to maturity, deferral, and replacement. GECC will provide a legal opinion supporting the enforceability of the Replacement Covenant.
ii. No Ongoing Payments -- Weak. Payments under the securities may be deferred by GECC at its option for up to ten years. Interest payments are cumulative during the deferral period. If distributions on the securities are deferred, GECC may not redeem or pay distributions on pari passu or junior securities.
iii. Loss Absorption -- Moderate. The subordinated debentures are senior in ranking only to preferred stock and common stock and are pari passu with other series of debt issued under the indenture and with trade creditors. The securities do not cross-default with other debt and investors have substantially limited rights regarding the ability to accelerate principal.
GECC, based in Stamford, Connecticut, is the legal entity which holds GE's investments in the commercial finance and consumer finance businesses. For the nine months ended September 30, 2007, GECC reported earnings of $6.5 billion and total assets of $599.9 billion.
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