GE, GECC's Rating May Be Cut by Moody's

* Moody's places GE's long-term credit ratings on review

* GE sees no 'major operational impacts' if downgraded

* Shares fall 5 pct after the closing bell


Reuters
Moody's says could cut GE's triple-A credit rating
By Scott Malone
Tue Jan 27, 2009 5:45pm EST

BOSTON, Jan 27 (Reuters) - Moody's Investors Service said on Tuesday it was reviewing General Electric Co's (GE.N) triple-A credit ratings, which could lead to a downgrade, and its shares fell as much as 5 percent in extended trade.

The move raises the risk that GE, which has a hefty finance business, could lose the long-term triple-A rating that has been a cornerstone of its GE Capital finance business.

On Monday, Standard & Poor's -- which has already warned that it could cut GE's triple-A rating -- said its view would not be affected by disappointing fourth quarter results, but warned it believed it would be "increasingly challenging" for GE Capital to meet its earnings targets.

The U.S. conglomerate has been working to reduce its reliance on GE Capital, as the credit crunch has hurt that unit over the past year and weighed on its earnings.

"Moody's is concerned that deepening global economic weakness could further compromise (GE Capital's) asset quality, potentially jeopardizing its ability to meet earnings objectives while also maintaining high earnings quality," the rating agency said. [ID:nWNA4886]

Many on Wall Street believe the world's largest maker of jet engines and electric turbines may have to sacrifice either the triple-A rating or its $1.24 per share annual dividend as it copes with falling profit in a brutal economy....