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GE’s credit is under review for downgrade by Moody’s
[LONDON] General Electric's (GE) credit rating is under review for a potential downgrade after the beleaguered manufacturer said it would fall short of its 2018 earnings forecast because of deepening problems in its power-equipment business. The shares fell.
Moody's Investors Service placed GE and its finance arm on review for a downgrade, according to a release Tuesday by the ratings company. A possible ratings cut "may not be limited to one notch," Moody's said. Fitch said Monday that it put GE's ratings on watch negative.
The move adds to the challenges awaiting new chief executive officer Larry Culp, who was named Monday to succeed John Flannery in a surprise appointment. With the change, the Boston-based manufacturer also said it would have to take a charge of about US$23 billion related to its power unit, which is struggling amid slumping global demand for gas turbines.
Moody's said it would examine "the continuing deterioration" and "dimmer prospects" of GE's power business. Moody's currently rates GE as A2, which is five steps above junk.
The shares fell 1.7 per cent to US$11.89 at 10.16am in New York, eroding the gain from Monday's 7.1 per cent rally that followed Mr Culp's appointment.