GE to offer 6 billion in bonds -- continuing to work down those huge unsecured Commercial Paper to Bank line Ratio.
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GE Capital Plans to Sell $6 Billion
Of Bonds Amid Slow Debt Market
By RICHARD A. BRAVO and NICOLE BULLOCK
DOW JONES NEWSWIRES
NEW YORK -- The General Electric Capital unit of General Electric Co. plans this week to sell $6 billion of debt securities, underwriters familiar with the deal said.
Some people said the offering would garner interest even after the company irked investors in March by saying it planned to sell a large amount of bonds shortly after making one of the largest debt issues ever.
Analysts said General Electric Capital's newest deal would draw buyers in part because there hasn't been much corporate-bond issuance recently. Some added that the company has taken steps to reassure bond investors recently.
GE'S DEBT
• Why Bond Guru Gross Decided to Attack GE's Finance Practices
03/22/02
• Fund Manager Gross Lashes Out At GE Over Disclosure, Debt Load
03/21/02
• GE Capital Sells Largest Issue Ever Denominated in U.S. Dollars
03/13/02
Among other things, they said, it has increased financial disclosure and vowed to keep its triple-A ratings. It also recently arranged an $18 billion syndicated credit facility aimed at improving its liquidity position.
"We imagine that this deal will go well because of the positive technicals and some appeasement by GE of investors," said David Hendler, analyst at CreditSights, a bond-research firm. "Investors won't dwell on some of those past issues."
Mr. Hendler said investor demand for bonds issued by financial companies also has strengthened recently. "There has been a sector switch into financials, which have tightened since earnings were released in April," he said.
A tightening refers to the difference between yields of corporate bonds and Treasurys. A narrowing of that margin, the so-called spread, suggests that the market views the corporate bonds as slightly less risky.
In March, GE Capital sold $11 billion in debt, in the largest domestic dollar-denominated debt offering ever. But the securities then weakened in trading after the company disclosed that it had made a $50 Billion shelf offering.
GE drew fire from Bill Gross, a funds manager at Pacific Investment Management Co. whose views carry much clout in the bond market. Mr. Gross said GE was overly reliant on issuance of short-term debt that wasn't fully backed by bank lines.
On Tuesday afternoon GE Capital's outstanding 10-year debt was quoted at a spread of around 0.95 percentage point over Treasurys, while its 30-year securities were at a spread of around 1.16 percentage points over Treasurys.
Banc of America Securities, Credit Suisse First Boston Corp. and Morgan Stanley are co-leads on the upcoming deal, which was expected to include five- and 10-year securities.
Meanwhile, in trading, investment-grade corporate bonds generally weakened slightly during a "pretty uneventful day," said Mark Humphrey, senior corporate-bond trader at Wachovia Securities.
In high-yield bond trading, Adelphia Communications bonds lost ground after a Securities & Exchange Commission filing detailed company payouts to members of the founding Rigas family for private ventures.
Still, the bonds held up fairly well despite a sharp decline in the company's stock, traders said. That is partly because the bond market is waiting for word on planned asset sales and a 10K filing, they said. Adelphia's 10 7/8% notes due 2010 were quoted down one to two points, bid at 75.
Separately, Williams Cos. bonds rallied on news that the company plans to raise cash to cut debt and was committed to keeping its investment-grade ratings. Williams 8 1/8% notes due 2012 jumped to about 98 bid from the low to mid-90's late last week.
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