Summary
GE CEO Larry Culp claims GECC is running a "matched book"
I estimate there could be $25 to $32 billion "un-allocated" debt at GECC.
If this debt was reallocated to the industrial segment it could punish GE's credit quality in the eyes of the rating agencies.
Sell GE.
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Source: Barron's
After years of deriding General Electric (GE) over its opaqueness I still find the company's financials rather mysterious. Prior to Q4 2018 I had written only about GE's industrial businesses, purposely avoiding GE Capital ("GECC"). The company's credit ratings have come under scrutiny, forcing me to parse through GECC. On General Electric: Was That A Run On The Bank? I questioned whether GECC's borrowings exceeded its customer loans:
GE Capital had short-term borrowings, non-recourse loans, and long-term borrowings totaling $70 billion. I assumed $16 billion was used to fund the financing receivables and $54 billion for some other purpose. I find it hard to believe that the lion's share of that $54 billion debt load was not GE debt simply parked at the financing arm.
Just over a week later Barron's provided an update on GE's debt load and the so-called "matched book" at GECC:
