Capital Markets

GE Capital Taps Debt Market for $10B

The largest offering to be backed by the FDIC, it includes two-year notes, 3.5-year notes, and one-year and 18-month floating-rate notes.
Stephen TaubJanuary 5, 2009

General Electric Capital Corp. is tapping the capital markets with a $10-billion, four-part sale of notes.

The sale, described by Bloomberg News as the biggest offering of debt to be backed by the Federal Deposit Insurance Corp., is expected to price by the end of the day Monday.

The underwriting includes $2 billion in two-year notes, $4.5 billion in 3.5 year notes, $2.5 billion in 18-month quarterly floating-rate notes and $1 billion in 3.5 year floating-rate notes. The joint lead managers are Banc of America Securities, Citigroup Global Markets, Goldman Sachs, JPMorgan Chase and Morgan Stanley, according to Reuters.

This is the second time GE Capital has tapped the capital markets in the past month. In early December it sold $6.5 billion of medium-term notes in four parts, up from an originally planned $5.5 billion. The sale was guaranteed by the Federal Deposit Insurance Corp.’s Temporary Liquidity Guarantee Program (TLGP).

Two weeks ago Standard & Poor’s revised its outlook on GE and units, including GE Capital Corp., moving to negative from stable on its AAA-rated debt. It further warned that S&P may downgrade the company from the exalted AAA level within two years. As the credit rating agency put it, there is at least a one-in-three possibility of a downgrade over that period. S&P added, however, that GE’s commitment to maintaining the highest credit quality; the still-solid prospects for many of its business segments, even in light of developing economic weakness; and the company’s ample financial flexibility should continue to support its ratings.

In other financing news Monday, PacifiCorp sold $1 billion debt in a two-part sale, according to Reuters. The financing included $350 million in 10-year notes and $650 million in 30-year bonds. Both issues were priced to yield 3.10 percentage points over comparable U.S. Treasuries, according to the wire service.