Io ci sto entrando su GE. Mi sembra incredibile quanto stia avvenendo, anche se in questi tempi tutto è possibile. Se ge capital va in bancarotta ritiro i miei ultimi risparmi dalla banca...
Gimme Credit analyst says buy GE's 9-year notes
Thu Mar 5, 2009 10:26am EST
NEW YORK, March 5 (Reuters) - Fixed-income research service Gimme Credit recommends that investors buy General Electric Capital Corp's nine-year notes, saying the company will likely remain a top-tier credit in the "AA" rating range.
Though 2009 is shaping up to be a tough year for GECC and its parent GE (
GE.N), "we continue to view the consolidated firm as a top-tier credit (still within the 'AA' range, after factoring in parent company support)," Gimme Credit analyst Kathleen Shanley said in a research note on Thursday.
She recommended that investors buy GE Capital's 5.625 percent notes due in 2018, which traded at a yield spread of 635 basis points over Treasuries on Wednesday. The spread widened to about 668 basis points over Treasuries on Thursday.
Bonds of GECC and its parent sold off this week as investors feared the recession would make it harder for consumers and businesses to pay their bills and would lead to higher credit losses at the finance arm. GE's "AAA" rating is on review for a downgrade by Moody's Investors Service because of concerns about the impact of the deteriorating economy on earnings.
Bondholders have also been unsettled by the possibility that there may be some credibility to the idea of spinning off the finance company from the industrial conglomerate, Shanley said. However, a spinoff is highly improbable, she said.
"First, GE has made no suggestion that it would consider such a possibility," she said. Moreover, a split would require the cooperation of bankers who have committed about $60 billion of lines of credit, she added.
GE Capital also is receiving major support from U.S. government programs, such as the Temporary Liquidity Guarantee Program, and the government would likely find a way to block any spin-off of the finance company, she said.
"GE Capital can issue up to $126 billion under the TLGP, so it doesn't have to run out and raise new funds at the onerous spreads implied by its credit default swap levels," she said.
GECC's five-year credit default swaps blew out to a record high of 20.7 percent upfront on Wednesday, according to Markit Intraday. That means it cost $2.07 million in an upfront payment, plus $500,000 annually, to insure $10 million of GECC debt. The swaps traded around 17.4 percent upfront on Thursday, after closing at 15.1 percent upfront on Wednesday, according to Markit Intraday. (Reporting by Dena Aubin; Editing by Tom Hals)
