The New Corporate Bond Benchmark – General Electric

• The Wall Street Journal – If GE Debt Gets Junked, Markets Have Reason to Shudder
  Hopefully GE will end up merely as a case study in financial mismanagement, rather than the trigger for messy markets
  The simplest difference is reassuring: GE hasn’t been downgraded to junk, and remains three rating notches above. The markets are treating GE bonds as though they had already lost investment-grade status; for example, the $1.3 billion January 2023 bond yield has leapt this year from 2.8% to 6.2%. But the credit-rating firms say that if GE’s restructuring goes as planned, there’s no need for further downgrades. If GE can get its finances under control, the panic will abate all by itself.

• Bloomberg.com – GE Could Be a $41 Billion Problem for Big Banks
   GE has set up $41 billion in credit lines from dozens of banks
   Five big U.S. banks committed to providing about half of that

  When it comes to U.S. banks’ lending risk, it doesn’t get much bigger than General Electric Co. The five biggest Wall Street firms have committed to lending at least $3.5 billion each to the industrial giant facing concerns about the sustainability of its debt. GE has almost $41 billion in credit lines it can draw from, according to its latest quarterly regulatory filing. If fully tapped, the two main credit facilities would rank as the largest loans to any U.S. company that go beyond next year, data compiled by Bloomberg show. GE had used only about $2 billion of the available credit by the end of the third quarter, leaving itself ample room to pull more if necessary.

• CNBC – There’s a $9 trillion corporate debt bomb ‘bubbling’ in the US economy

  At first glance, it looks like a $9 trillion time bomb ready to detonate, a corporate debt load that has continued to escalate thanks to easy borrowing terms and a seemingly endless thirst from investors. On Wall Street, though, hopes are fairly high that it’s a problem, but a manageable one, at least for the next year or two. The resolution is a critical one for financial markets under fire. Stocks are floundering, credit spreads are blowing out and concern is building that a combination of higher interest rates on all that debt will begin to weigh meaningfully on corporate profit margins. “There is angst in the marketplace. It’s not misplaced at all,” said Michael Temple, director of credit research at asset manager Amundi Pioneer. “But are we at that moment where this thing blows sky high? I would think that we’re not there yet. That’s not to say that we don’t get there at some point over the next 12 to 18 months as rates continue to move higher.”

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