Board-Ansicht
Mix-Ansicht- Nochmal GE, mit interessanten Statements - XERXES, 21.03.2002, 09:39
Nochmal GE, mit interessanten Statements
Pimco, Biggest Bond Buyer, Sells Some GE Capital Debt (Update4)
By Emma Moody and Liz Goldenberg
Newport Beach, California, March 20 (Bloomberg) -- Pacific Investment Management Co.'s Bill Gross, manager of the world's biggest bond fund, said the firm sold its $1 billion of General Electric Capital Corp.'s short-term IOUs because the finance company's debt level is ``extreme.''
Pimco decided within the past week to sell its GE Capital commercial paper, obligations that mature in less than nine months, after the General Electric Co. unit sold $11 billion of long-term bonds and then filed to sell another $50 billion of securities. Pimco was also concerned that GE Capital had less of its short-term debt backed by credit lines than other issuers.
The sale by Pimco, which owns about $20 billion in commercial paper, may pressure GE Capital to reduce the short-term debt that accounts for half the finance company's $200 billion of liabilities. GE Capital is the biggest issuer in the $1.4 trillion commercial paper market.
The firm's level of short-term debt ``is an extreme situation that investors should rebuke and rebel against,'' said Gross in a telephone interview. ``The sale of our paper was one small step in that direction.''
Gross said the firm sold its holdings in part because GE Capital didn't warn investors during the $11 billion bond sale that it planned within days to file with the Securities and Exchange Commission to sell more debt.
GE Capital plans to reduce its commercial paper to ``less than $100 billion by the end of the year,'' Keith Sherin, General Electric's chief financial officer, said in an interview with Bloomberg News. Sherin told CNBC he plans to lower it to 25 percent to 30 percent of the company's debt, down from about 50 percent at the end of 2001.
No Room Left
The finance arm of GE lodged the new filing because the bond sale exhausted the previous filing, Sherin told Bloomberg News. The firm didn't hide its plans to file, he said.
``After the debt sale, we had no outstanding shelf,'' or the federal registration required to sell long-term U.S. debt, Sherin said. ``It was consistent with running GE Capital and managing our capital structure.''
GE Capital has also come under criticism because it chose to back less a third of its $100 billion worth of commercial paper with bank credit lines, less than other issuers. Moody's Investors Service, the second-largest credit rating company, demanded GE Capital increase the amount of bank commitments to about 50 percent, according to GE. Moody's also said GE Capital wouldn't merit its ``AAA'' credit rating without the support of its parent.
GE Capital, which has about $400 billion in assets, responded to Moody's on Monday, saying it asked banks to extend it as much as $50 billion in credit lines, up from $33 billion.
Strong Credit
``It's a very strong credit in and of itself but we don't believe, relative to its peers, that on a standalone basis it's a `AAA' quality firm,'' said Moody's analyst Robert Young.
Other investors said they would still buy GE Capital's commercial paper.
``We continue to buy, we feel very comfortable with the credit,'' said Steve Traum, who has about $10 billion of commercial paper in the $15 billion he manages for Teachers Insurance and Annuity Association -- College Equity Retirement Fund.
Gross, whose firm owns about $20 billion of commercial paper and retains less than $50 million of GE Capital intermediate notes, said General Electric's earnings have been helped by GE Capital's low-cost borrowing, which has been less than the U.S. government. The company used the money in part to finance as many as 100 acquisitions over the past five years.
General Electric offered to buy Tyco International Ltd.'s CIT Group finance unit for as much as $8 billion, according to people familiar with the matter. Shares of General Electric, which denied it was in talks, closed down $1.1, contributing the third most of any stock to the S&P 500 Index's 1.58 percent decline.
GE Capital is using ``near hedge fund leverage'' and ``its survival depends on the confidence of outside investors,'' Gross said in a commentary on Pimco's Web site. ``Investor comfort and confidence these days is fragile indeed.''
Gap Widens
Gross said GE Capital should have told investors before last Wednesday's bond sale that the firm planned to file Monday with the Securities and Exchange Commission to sell as much as $50 billion in new securities.
``That isn't full disclosure,'' Gross said. ``Those who bought the debt are now under water because of the announcement that there will be more.''
GE Capital sold 30-year bonds to yield 109 basis points more than comparable Treasury securities. That gap has since widened to 121 basis points. The five-year bonds, sold at 80 basis points more than Treasuries, now trade at a 90-point premium, traders said. A basis point is 0.01 percentage point.
``That should come as a wake up call to bond investors that they need to be better informed and they need to be higher on the priority list of corporations in terms of honesty and disclosure,'' Gross said. ``Nothing will change'' in terms of corporate disclosure unless investors know there are lots of GEs out there,'' he said.
Investors may pay attention, analysts said.
``If Pimco's not going to buy GE Capital, why would others buy it?'' said David Hendler, an analyst at CreditSights Inc., a research firm. ``They are viewed as the smartest and the best out there.''
<center>
<HR>
</center>
Thread gesperrtgesamter Thread:
