13 Mar 2009

General Electric debt rating cut

8:09 pm on 13 March 2009

Standard & Poor's has lowered its debt rating for General Electric.

The rating of the United States conglomerate has been cut from AAA, the highest rating, to AA+, which may make it more expensive for the company to borrow in future.

The downgrade is significant because General Electric is viewed as a barometer of the health of the US economy.

General Electric last month cuts its dividend, a move it said would save it $US9 billion a year as it sought to shore up its finances.

General Electric's finance unit, GE Capital, has been hit because it makes a wide variety of loans, including mortgages, whose value has since plummeted.

The economic downturn has also hit its industrial unit, which makes aircraft engines, home appliances, light bulbs and wind turbines.

The ratings downgrade means that Standard & Poor's considers General Electric less likely to repay its debts. However, the agency considers General Electric's outlook stable.