Brooke Sutherland, Columnist

GE's Relief Rally Gets a Reality Check From Moody's

A negative credit-rating outlook puts more pressure on the company's review of asset sales and adds to arguments for a breakup.

April 25, 2018 at 6:07 PM UTC

By Brooke Sutherland

Brooke Sutherland is Bloomberg News' Boston bureau chief and writes the Industrial Strength Newsletter. She was previously a Bloomberg Opinion columnist covering deals and industrial companies and an M&A reporter for Bloomberg News.

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General Electric Co. is making progress on its reinvention, but Moody’s Investors Service Inc. just provided an important reality check.

The credit-rating company on Wednesday said it now has a negative outlook on GE’s A2 status, and lowered the stand-alone credit profile for GE Capital to Ba1, one step below investment grade. The move knocked GE shares down more than 4 percent, erasing the gains from last Friday after the company reported better-than-expected results and maintained its 2018 outlook. The relief rally was understandable, but the jubilation looked a bit premature and Moody’s action this week is a reminder of why.