$10 billion FDIC-backed debt from GE's finance arm

General Electric Co's finance arm has launched a $10 billion sale of FDIC-backed debt. It became the largest sale under the government guarantee program exceeding $9 billion from Bank of America that took place in December.

The program, Temporary Liquidity Guarantee (TLG), was created in November with the aim of filling a financing gap for banks.

Earlier this year, yields on GE Capital unsecured bonds had increased due to the concerns that the credit crisis was making it more difficult for the company to pay off its debt. 

GE Capital is forecasted to sell $2 billion worth two-year notes and $4.5 billion worth 3.5-year notes. It is also expected to sell $2.5 billion worht 18-month quarterly floating-rate notes at five basis points for the London Interbank offered rate and $1 billion worth 3.5-year floating-rate notes.

Banc of America Securities, Citigroup, Goldman Sachs, JP Morgan Chase and Morgan Stanley have stepped forward as the joint lead managers of the sale are.

Moreover, GE has raised $15 billion from stock sales, in order to increase its finances, following loss of half of their shares’ value last year. 

GE officials have declared keeping the "AAA" rating to be a top priority at the moment. However, the rating outlook on GE has been lowered from "stable" to "negative" by Standard & Poor's in December, due to a one-in-three chance of a downgrade over the next two years.

Source: Reuters