GE is working with the Federal Reserve to unlock the credit markets for buyers of commercial paper (see definition below). GE supports the Fed’s Commercial Paper Funding Facility (CPFF), because it will add an important liquidity backstop to the $1.5 trillion commercial paper (CP) market. While GE has continued to issue CP without disruption, this facility will help to reduce rollover risk for participating issuers and provide support for a more active secondary market.
We believe the CPFF will strengthen confidence in the prime commercial paper market and encourage more term buying.
We plan to use the CPFF primarily to support our CP investors who may need liquidity. To ensure access and operability and to demonstrate our support for the Fed’s action, we plan to test the facility on October 27. This facility in addition to the recently announced Money Market Investor Funding Facility will provide significant support for the CP market.
* Visit the Federal Reserve’s Web site for more information.
* Read Barclays Capital review of GE’s funding options, including commercial paper.
* Read the Bloomberg article on GE’s support for the Fed’s commercial paper facility.
Jeff Immelt talks to Jim Cramer of CNBC’s ‘Mad Money’
GE’s Jeff Immelt sat down with CNBC “Mad Money” host Jim Cramer on October 8th to discuss GE’s “belt and suspenders” approach to protecting the company during the current economic crisis and how GE has methodically decreased its reliance on commercial paper. This video and the other four video segments available below were shared with GE employees on insideGE, our corporate intranet. We’re making them available on YouTube now, so we can offer the same perspective to our investors, customers, journalists, analysts and other GE stakeholders.
Q: What is commercial paper and why is it important to GE?
A: Commercial paper is a debt instrument companies use to raise short-term cash to fund their business operations. It’s essentially a promissory note that is sold by the issuing company to institutional investors, either directly or through dealers, as a form of borrowing. Commercial paper can be issued for terms as short as one day or as long as 270 days – and then must be repaid by the issuer. Commercial paper is generally offered by large stable companies with high credit ratings. The commercial paper of GE and its affiliates has the highest ratings of A-1+/P-1 from Moody’s and S&P.
Read more questions and answers on GE’s commercial paper funding facility.
