General Electric’s AAA: The End of an Era

Its the end of an era for bond investors as General Electric finally loses its AAA rating with S&P. Moody’s will follow suit in a matter of days, I’d expect.

I have little to say other than to claim GE is currently a “AA” risk is just as crazy as to say they are “AAA” for all the reasons I’ve discussed before.

Anyway, I thought I’d dispell a myth. I keep hearing claims that GE isn’t “trading like a AAA.”

First of all, GE is the AAA corporate bond market. So I don’t know what “trading like a AAA” means if it doesn’t mean GE. Below is a pie chart of all bonds in the Merrill Lynch AAA corporate bond index.

Graph 1

Even given that, GE never did trade like a AAA, if you define it as trading better than a AA. Look at the chart below. GE has traded above AA-rated industrials for years.

Graph 2

Just more proof that the media doesn’t know what they are talking about.

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Accrued Interest provides unique, expert insight to developments in the U.S. bond market. It is written by an anonymous professional working in the field.

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1 Comment on General Electric’s AAA: The End of an Era

  1. GE is still the same company and there is nothing to say that it will not again become AAA rated. This is nothing more than the opinion polls that dominate the country. Just because the company’s so called rating is lowered, by the same rating orgnizations that made SUBPRIME , TRIPLE A RATED. Doesn’t mean the company is less solvent. In fact, it may be more solvent since the IMMELT team took actions that removed some of the major issues.

    I strongly believe that GE can do what it did in the past…reinvent itself, admit mistakes, ADAPT and LEAD.

    GE’s past success was built on one word…LATIN..LEADERSHIP, ADAPTABILITY, TALENT, INFLUENCING and NETWORKS..

    Learn more about GE’s 127 years of success and failure and REINVENTION.. read.. THE SECRET TO GE’s SUCCESS..and GEWATCHER BLOG..(WWW.STRATEGYLEADER.COM)


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