OREANDA-NEWS. S&P Global Ratings said today that it has lowered its long-term corporate credit rating on General Electric Co. and GE Capital Global Holdings LLC to 'AA-' from 'AA+'. The outlook is stable. Our 'A-1+' short-term rating on both companies remains unchanged.

At the same time, we lowered our issue-level ratings on GE's debt in conjunction with our downgrade of the company in accordance with our corporate notching methodology.

"The main factor behind the downgrade is our view of GE's longer-term financial policy, including our expectation that it will now maintain leverage in the low-2x area and a FFO-to-debt ratio of over 30% as it:Continues to invest to deeply incorporate technology into its core industrial businesses;Finalizes its exit from non-related financial services;Aligns and adapts its remaining financial services verticals even more closely with its industrial operations;Expands via industrial acquisitions; andRetains a strong focus on returning capital to its shareholders," said S&P Global credit analyst Robert Schulz.

The stable outlook on GE reflects our belief that the company's financial policy will remain sufficiently conservative to keep its leverage below 2.5x and its FFO-to-debt ratio above 30% even as it pursues acquisitions as part of its growth initiatives and returns capital to its shareholders. The outlook also incorporates our expectation that the GECGH's capital levels and risk performance will remain consistent with an investment-grade rating.

We could lower our ratings on GE if we believe that the company's financial policy is becoming more aggressive due to leveraged share repurchases and/or debt-funded acquisitions that cause its debt-to-EBITDA leverage metric to climb toward 3x and its FFO-to-debt ratio to fall below 30%. Although less likely, we could also lower our ratings if the company continues to narrows its focus on its industrial end markets, ultimately weakening its diversification, or if there was a unexpected and substantial weakness in its operating performance.

Although unlikely over the next two years, we could raise our ratings on GE if the company's financial policies and performance led to improved credit measures, including a debt-to-EBITDA leverage metric approaching 1.50x and a FFO-to-debt ratio of more than 45% for a sustained period with no prospects of deterioration in the near-term.