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Corporate Finance

Finance arm goes long $88 billion in 2002

By Staff Writer | Updated on October 01, 2003

As corporate accounting began getting closer public scrutiny in late 2001, investors began prying into debt management and liquidity. Rating agencies also began tightening the guidelines, such as separating credit risk from liquidity risk, needed to keep existing ratings.

To take a leadership role, GE Capital Corp. decided to reduce its reliance on commercial paper. After its acquisition of Heller Financial when term funding was delayed, GECC’s reliance on commercial paper had zoomed to 49% of its total debt; long-term debt was 46%. The solution: reduce commercial paper to a more manageable 25% to 35% ratio. In dollar terms that meant reducing commercial paper about $33 billion from a high of $117 billion.

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