TEXT-S&P:GE rating unaffected by purchase Of Avio SpA
Dec 21 - Standard & Poor's Ratings Services said today that the announcement by General Electric Co. (GE; AA+/Stable/A-1+) that it is purchasing Italy-based aerospace group Avio SpA (not rated) for about EUR3.3 billion does not affect our ratings or outlook on GE. We assume the purchase will be funded from operating cash flow, and we expect it to close around mid to late 2013. The majority of Avio's aviation business is as a long-time supplier to GE's aviation business.
The ratings on GE reflect Standard & Poor's view of the company's diversity of end markets, track record of solid profitability, significant cash flow from services businesses, and substantial liquidity. As U.S. and international economic uncertainty persists, we expect GE's broad business and geographic diversity to allow it to continue to produce generous cash flow while maintaining adequate capital at its finance subsidiary, General Electric Capital Corp. (GECC). We expect GE to maintain ongoing cash balances at the industrial parent of about $8 billion or more. In fourth-quarter 2012, the company issued parent-level debt to repay the February 2013 maturity of $5 billion.
For more information, please see Summary: General Electric Co. published Dec. 4, 2012, on RatingsDirect.
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