Moody's affirms GE

Moody's Investors Service said it affirmed the Aaa long-term and Prime-1 short-term ratings of General Electric Co. and General Electric Capital Corp., following the announcement by GE that it will undertake additional measures to strengthen GE Capital's financial position.

The outlook for both companies is stable.

The affirmation and stable outlook embed Moody's expectations that:

• GE will be able to effectively execute its plan to downsize GE Capital's scale and reduce its reliance on confidence-sensitive short-term funding while maintaining solid earnings and asset quality;

• GE Capital will earn a minimum $5 billion in each of the next several years;

• General Electric Capital Services, parent of GE Capital, will be able to restore its dividend payout to GE to historical levels by 2010;

• The company's industrial businesses will generate cash flow from operations that exceeds $16 billion in 2010;

• GE will continue to suspend its share buyback until these expectations are realized; and

• The dividend stress on GE industrial will abate, either through the resumption of more significant dividends from GECS to GE or through the reduction of the GE external dividend.

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