S&P downgrades GE

Standard & Poor's said it lowered the long-term ratings on General Electric Co. and General Electric Capital Corp. to AA+ from AAA and affirmed its A-1+ short-term credit ratings.

The outlook is stable.

S&P said the main factor in the downgrade was its assessment of the standalone credit profile of financial services unit GECC, which it now views as A, down from A+.

"We believe that GECC is under increasing earnings pressure, due to the recent sharp deterioration in general economic conditions around the globe," S&P analyst Robert Schulz said in a statement.

"This will result, in our opinion, in rising credit losses across key segments of GECC's finance portfolio," Schulz said. "Still, we believe that GE's industrial-based cash generation capabilities remain fundamentally strong - even in the face of enormous global economic headwinds - and that it will generate growing cash balances from current levels over the next two years. We do not anticipate that GE will benefit from any meaningful earnings or cash flow from GECC through 2010."

Ratings reflect the company's excellent business risk profile, its significant cash flow and liquidity, its strong corporate governance and management's commitment to maintaining very high credit quality, the agency said.

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