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No One Is Too Big To Move

10 April 2015 by lberuti

General Electric (GE) announced overnight that they are selling off the majority of GECC (General Electric Capital Corporation) assets. These assets are sold mostly to Blackstone, and some loans to Wells Fargo. This came as a surprise to the market, and GECC’s risk premium, which had been relatively stable recently, was marked aggressively tighter, down 19bps to 41bps. The move is seen as a positive for GECC, as it is now guaranteed by a blue chip industrial company which will focus going forward on the businesses it has always done well. It will be a cleaner name once GECC assets are sold off. And the market was quick to note that GE will guarantee all tradable senior and subordinated debt issued by GECC. On top of that, GE does not expect to issue incremental GECC long term debt for at least 5 years.