Moody’s Investors Service downgraded on Friday General Electric Co.’s senior unsecured debt rating to A1 from Aa3, after GE unveiled a plan to exit most of its GE Capital finance arm, and sell $26.5 billion worth of office buildings and commercial real estate debt to Blackstone Group LP, Wells Fargo & Co. and other buyers.
The rating agency left its rating on GE Capital unchanged at A1.
The action “reflect our perception of a growing level of financial risk tolerance, in favor of equity holders and at the expense of creditors,” Moody’s Senior Vice President and lead analyst for GE Russell Solomon said in a statement.
“The pending GE Capital asset sales, with virtually all benefits inuring to equity owners, taken together with high share repurchase activity and a high dividend payout in recent periods, and the liquidity-consuming Alstom acquisition that is still pending, reflect a noteworthy shift by GE to more aggressive financial policies.” The rating outlook remains stable.
GE shares surged 4.7% in premarket trade, and are up 1.8% in the year so far, while the Dow Jones Industrial Average has gained 0.8%.