Today, GE Capital announced that the Federal Deposit Insurance Corporation cleared its plan to begin exiting the agency’s Temporary Liquidity Guarantee Program, known as TLGP. In what Reuters described as “a show of strength” for the company, GE Capital will stop issuing government-guaranteed short-term commercial paper and will be able to issue non-guaranteed long-term debt with maturities of up to three years.Today, GE Capital announced that the Federal Deposit Insurance Corporation cleared its plan to begin exiting the agency’s Temporary Liquidity Guarantee Program, known as TLGP. In what Reuters described as “a show of strength” for the company, GE Capital will stop issuing government-guaranteed short-term commercial paper and will be able to issue non-guaranteed long-term debt with maturities of up to three years.
The TLGP program, which is set to expire this fall, was originally set up to support healthy financial firms in an unprecedented market. It essentially provides government backing, in exchange for a fee paid by the issuer, for certain types of debt in order to encourage liquidity in the lending markets. GE Capital, which provides critical financing for U.S. infrastructure projects, municipalities and industries including airlines, hospitals, utilities, and many middle market sectors, joined in November — stating at the time that participation helped to level the playing field with other financial services companies who were eligible for the guarantees.
“Today’s plan to exit from TLGP affirms the strength of GE Capital’s funding and liquidity position, including reduced reliance on government funding programs and our ability to access non-guaranteed debt markets. We have issued approximately $12 billion in long-term debt outside of the program, including close to $3 billion this week in a Euro deal that saw strong demand,” said GE Senior Vice President and Treasurer Kathryn Cassidy. “This move is a positive step in returning the broader capital markets to normal functioning and is in line with GE Capital’s 2009 and 2010 debt issuance and funding cost plans. It also allows us to respond to strong investor demand for GECC longer-dated non-guaranteed commercial paper.”
GE Capital has already completed its 2009 long-term-debt funding plan and has pre-funded about 45 percent of its 2010 requirement, including $12 billion of non-guaranteed issuance. Additionally, GE Capital Services has reduced six months ahead of plan its commercial paper balance from more than $100 billion in 2008 to $50 billion at the end of the second quarter of 2009 and increased its cash balance to more than $50 billion.
* Read today’s announcement
* Read Reuters’ story
* Read Bloomberg News’ story
* Read “The facts about GE and TLGP” on GE Reports
