Summary
This 8-K filing from General Electric Company (GE) on November 12, 2008, announces a significant development for its subsidiary, General Electric Capital Corporation (GE Capital). GE Capital has received approval from the Federal Deposit Insurance Corporation (FDIC) to participate in the FDIC's Temporary Liquidity Guarantee Program. This designation allows GE Capital to have its senior unsecured debt, including commercial paper and term debt, guaranteed by the FDIC. This initiative is designed to bolster confidence in GE Capital's debt issuances during a period of market uncertainty. The guarantee, effective on or before November 14, 2008, will cover debt issued through June 30, 2009, with the FDIC guarantee extending to the debt's maturity date or June 30, 2012, whichever comes first. A cap is in place, limiting the guaranteed debt to 125% of GE Capital's senior unsecured debt outstanding as of September 30, 2008, that was scheduled to mature by June 30, 2009. While this program offers a substantial liquidity and credit support enhancement, GE Capital and GE Company will enter into an agreement with the FDIC, which includes a reimbursement obligation should the FDIC be required to make payments under the guarantee.
Key Highlights
- 1GE Capital approved for FDIC's Temporary Liquidity Guarantee Program, enhancing debt credibility.
- 2FDIC will guarantee GE Capital's senior unsecured debt, including commercial paper and term debt.
- 3Guarantee is effective from November 14, 2008, through June 30, 2009, for new issuances.
- 4FDIC guarantee extends until debt maturity or June 30, 2012.
- 5A cap limits guaranteed debt to 125% of eligible senior unsecured debt outstanding as of September 30, 2008.
- 6GE Capital and GE Company must enter into an agreement with the FDIC, including a reimbursement clause.
- 7This move aims to provide crucial liquidity support and reduce borrowing costs for GE Capital amidst market stress.