Fitch Ratings says General Electric Company's (GE) $1.5 billion add-on to its previously issued $2,250 million of 4.35% senior unsecured notes due 2050 and GE Capital Funding, $1.5 billion add-on to its $1.4 billion of 4.4% senior unsecured notes due 2030 do not affect the company's ratings.
Fitch continues to rate the 2050 and 2030 notes 'BBB'. Proceeds will be used to reduce debt, while the Long-Term Issuer Default Ratings for GE and GE Capital Funding are BBB with a stable outlook.
Fitch says GE is seeing large reductions in activity in the aviation market, execution challenges in Renewable Energy, and restrictions around travel and site-access associated with the coronavirus outbreak and given the uncertain trajectory of the pandemic there is a risk that GE's end-markets could experience additional headwinds.
Balanced against that Fitch notes that GE's credit profile includes an increased focus on core businesses and financial flexibility supported by high cash balances. GE's long-term performance is supported by the Aviation business which, despite near term market pressures, is expected by Fitch to maintain a strong competitive position.
“Aviation has broad technological capabilities including additive manufacturing. Other strengths include GE's global presence and substantial services revenue. Services generate solid margins and typically are less cyclical than GE's equipment revenue, although the coronavirus pandemic is having a negative impact on near-term activity. GE is smaller as a result of asset dispositions but is still large relative to most peers,” said Fitch in a note.