General Electric Company (NYSE:GE): Generally Going Strong
Denver, CO, 07/15/2013 (Avauncer.com) – In the United States, sales of corporate bonds hurtled forth at their fastest pace since 7 weeks, and touched at least $23B as there was a narrowing in relative yields. The largest jet engine maker, General Electric Company (NYSE:GE) raised $3.5B in 3 parts. There was an upswing in sales post 6 weeks of below-average issuance, even as Ben Bernanke, the chairman of the Federal Reserve committed that the accommodative monetary policy will be maintained. In May, he had told the Congress that the central bank might start pulling back on unprecedented stimulus.
The tide turns
It was a relief when the “panic selling” finally abated this week which stemmed the outflows from different mutual funds. Luckily the market could wade through that news and navigate the craters of volatility. Today, investors may actually find that chink in the armor and get things cheaper than they were, just a few weeks ago. After a speech in July, in Boston, Bernanke said that what the U.S economy needs is a highly-accommodative monetary policy for the near future.
The preferred option
As per a report from BAC, this week, high-yield global funds reported $760M of inflows while United States’ investment-grade funds reported an outflow of $320M. On July 9, the finance unit of GE Capital’s sold $900M of 2-year, floating-rate notes, to yield 38 basis-points in excess of the 3-month London Interbank-offered rate and $1.35B of floaters which are due in July 2016. This will pay a relative-yield of 65 basis-points. The financial and technology services provider’s $1.25B of 1.5%, 3-year debt yielded 83 basis-points more than other similar-maturity Treasuries.
While GE tides over one current, it has to face another one. Just a couple of days ago the Financial Stability Oversight Council of the Treasury announced that they have designated GE’s GE Capital and AIG as the first two, non-bank financial institutions that they consider are potentially harmful to the economy of the United States. What is disconcerting is the fact that the council has not examined the real financial stability of either of these two companies. What is yet to be seen is whether GE will be able to edge itself out of this one.