Bamby
New member
These Banks Now Have A $41 Billion Problem In GE
Three weeks ago we reported that in the first nail to its investment grade coffin, GE had found itself completely shut out of the Commercial Paper market when Moody's downgraded its senior unsecured rating to Baa1, from A2, and downgraded the short-term rating to P-2, from P-1, making future sales of CP impossible. So, in lieu of CP access, GE said it would replace that funding with a net $40.8 billion of available credit facilities committed from banks. Or, as we explained "GE will now use its revolver, which carries a higher interest rate, to fund what it previously achieved using CP."
This transition in GE's reliance from commercial paper to revolver is not just a problem for GE, however, which now faces higher funding costs and encumbered assets: with the industrial conglomerate's business and operations deteriorating rapidly, GE has become a major headache for America's largest banks almost overnight.
As Bloomberg reports, the five biggest Wall Street firms have committed to lending at least $3.5 billion each to GE even as the industrial giant is facing rising concerns about its viability and the sustainability of its debt.
http://www.zerohedge.com/sites/default/files/inline-images/ge exposure 11.21.jpg?itok=0ld6Gbbg
zerohedge
Some of the biggest American banks involved in the potential loses. Through experience banks have been able to subsidize or pass all their losses off to others. In this case are the taxpayers going to fleeced directly to cover? Or are they going to conspire to make savers pay for it with holding to substandard interest rates used to cover their losses....
Three weeks ago we reported that in the first nail to its investment grade coffin, GE had found itself completely shut out of the Commercial Paper market when Moody's downgraded its senior unsecured rating to Baa1, from A2, and downgraded the short-term rating to P-2, from P-1, making future sales of CP impossible. So, in lieu of CP access, GE said it would replace that funding with a net $40.8 billion of available credit facilities committed from banks. Or, as we explained "GE will now use its revolver, which carries a higher interest rate, to fund what it previously achieved using CP."
This transition in GE's reliance from commercial paper to revolver is not just a problem for GE, however, which now faces higher funding costs and encumbered assets: with the industrial conglomerate's business and operations deteriorating rapidly, GE has become a major headache for America's largest banks almost overnight.
As Bloomberg reports, the five biggest Wall Street firms have committed to lending at least $3.5 billion each to GE even as the industrial giant is facing rising concerns about its viability and the sustainability of its debt.
http://www.zerohedge.com/sites/default/files/inline-images/ge exposure 11.21.jpg?itok=0ld6Gbbg
zerohedge
Some of the biggest American banks involved in the potential loses. Through experience banks have been able to subsidize or pass all their losses off to others. In this case are the taxpayers going to fleeced directly to cover? Or are they going to conspire to make savers pay for it with holding to substandard interest rates used to cover their losses....