GE or the General Electric Company is an American multinational conglomerate in New York whose headquarter is situated in Boston.
In the year 2011 GE was ranked as the 14th most profitable company among the Fortune 20, however the present scenario indicates that the world’s most valuable and profitable company is struggling hard to survive.
A sense of urgency if being formed due to the company’s high leverage.
The General Electrical Company was once defined as the most valuable company of the world but it is now facing a stark downfall in its grace, GE’s bonds are taking a hit while the confidence of investors in the company is shaking.
On November 13th trading saw GE’s fall in the 4.4 percent bond of 2035 by some 2.5 percent even after the company has announced that it will sell away a portion of its stakes in the oil field company Baker Hughes.
Even though the shares rose after the announcement the decline came inevitably.
The company is planning to raise $4 billion in the form of cash from the oil field company Baker Hughes sale and it holds no expectation to return back to bond market anytime soon.
Investors fear that the GE’s cash pile is shrinking as the future borrowing cost of the company has been pushed up again.
The company has gradually demoted to BBB1 in the previous month , repricing its outstanding bonds not only to the BBB levels but also to the BB rated levels when it comes to the high yields, according to a note from the Bank of America.
Larry Culp who has been appointed as the CEO of the company in October told CNBC on Monday, that the GE is now committed to reducing its high leverage and laid stress on the sense of urgency regarding company’s debt.
Since 2016 the market value of the company has decreased more than $200 billion.
Source: BusinessInsider, NewsLocker
