August 22, 2016 / 10:12 AM / 3 years ago

GE's plan to take on debt could pressure credit metrics - Moody's

The logo of Dow Jones Industrial Average stock market index listed company General Electric is shown at their subsidiary company GE Aviation in Santa Ana, California April 13, 2016. REUTERS/Mike Blake/File Photo -

(Reuters) - General Electric Co’s (GE.N) plan to take on $20 billion of debt adds to the “uncertainty surrounding its ability to mitigate” pressure on credit metrics, Moody’s Investors Service said on Monday.

Moody’s downgraded GE’s senior unsecured debt rating to A1 in April 2015 due to concerns about the industrial-focused businesses and lower resiliency of cash flows and earnings.

The prospect of additional debt is the latest sign that GE is consciously shifting toward a credit profile that is more fully levered and typical of other large industrial peers, Moody’s analyst Russell Solomon said in a statement.

“This is compounded by the ballooning debt-like pension deficit GE is already facing, further elevating leverage.”

The company had borrowings of $156.4 billion as of June 30.

The industrial conglomerate, long considered a bellwether for the U.S. economy, reported a better-than-expected profit last month, but weak demand for its new oil, gas and transportation equipment raised concerns about its full-year performance.

Reporting by Arathy S Nair in Bengaluru; Editing by Maju Samuel

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