GE Capital Corp (GECC) is offering to exchange up to $30 billion of outstanding bonds into new notes issued by GE Capital International Funding, a new debt issuance vehicle.
The issuer is a newly formed finance subsidiary of GECC that will hold GECC’s international businesses, with the vehicle to be based in Ireland, the Wall Street Journal reported.
The offer is part of GE’s plan to downsize GECC by divesting key parts of its mid-market lending business.
Standard and Poor’s assigned a ‘AA+’ rating to the senior unsecured debt issuance and Moody’s assigned a A1 rating.
The ratings are based on guarantees by General Electric and GECC.
The new notes could total as much as $30 billion, depending upon the participation of eligible holders of the more than 100 GECC notes totalling around $100 billion that are targeted for exchange, Moody’s said.
“An objective of the exchange is to capitalise holdings with a combination of debt and equity that is expected to be acceptable to the entity’s European regulators,” Moody’s said.
Moody’s said it also expects GE to seek a reversal on the decision by the US Treasury Department’s Financial Stability Oversight Council to designate GECC a systemically important financial institution (SIFI), as a result.
All holders participating have a par-for-par exchange option. Priority will be given to filling the six month maturity bucket, capped at $15 billion, and which would accelerate GECC’s consolidated debt repayments compared to its currently scheduled maturities, Moody’s said.
Upon the merger of GECC into GE, expected to occur in the fourth quarter of 2015, GE Capital International Funding Co will become a subsidiary of GE Capital International Holdings Limited.