WSJ: What GE needs to do to avoid junk status

|By:, SA News Editor

If General Electric (GE +0.4%) loses its investment-grade credit rating, its borrowing costs will rise, increasing pressure on its ailing industrial and lending businesses and threatening its stocks and bonds, Matt Wirz writes in the Wall Street Journal.

Management has said it plans to fix the company’s finances to reverse the downgrade of its credit rating in October to BBB-plus, three notches above junk debt territory.

Here are some factors that could prompt another ratings cut: A higher leverage ratio, a capital raise, deal risks like the Baker Hughes sale and spinoff of GE Healthcare, more negative writedowns, or fines from lawsuits and federal investigations.

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