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General Electric (GE) has been upgraded by a notch to BBB+ by Fitch. Fitch also upgraded GE’s senior unsecured debt and its subordinated guaranteed notes 7.5% due 2035 and 4.125% due 2035 to BBB+ from BBB along with upgrading its subordinated notes 4.875% due 2037 to BBB from BBB-. The upgrade results from Fitch expectations that, post the Vernova spin-off in early April 2024, GE will have enhanced financial flexibility, although initially GE’s leverage will remain high as it will retain most of Vernova’s debt. Fitch projects GE to generate free cashflow margins in the high single digits and EBITDA margins of around 20% with leverage metrics declining towards mid-2x over next 12-24 months post transaction.
GE’s bonds traded stable with its 7.5% 2035s at 115.9 cents on the dollar, yielding 5.6%