GE Capital Offers to Buy Back Some Debt Article

By KATE HAYWOOD and ROMY VARGHESE General Electric Co.'s GE Capital Corp. unit is offering to buy back $1.46 billion of its bonds as a way to boost its financial flexibility and possibly make it easier to participate in new government financing programs. GE spokesman Russell Wilkerson characterized the offer, which was launched Friday, as a "housekeeping exercise" after the amount of debt outstanding reached the point for it to be possible to redeem. "We have a strong funding position, and [the offer] is certainly consistent with that," Mr. Wilkerson said. GE's Chief Financial Officer Keith Sherin said Thursday that the firm has $45 billion in cash. Additionally, GECC is seeking relief from restrictions on the debt called negative pledge covenants. These prevent the company from issuing debt that would undermine the unsecured bondholders' priority claim on assets in case of distress. This would make future secured borrowing easier -- and may make it "more simple" to participate in the Federal Reserve's Term Asset-Backed Securities Loan Facility or TALF, Mr. Wilkerson said. "We are evaluating the TALF program, but have not yet decided whether or not we will pursue participating in it." He added that company officials don't believe the buyback is necessary should they decide to tap the new initiative. Meanwhile, in Treasury activity on Friday, despite a dismal U.S. unemployment report, Treasurys gave up their gains and ended mostly lower or flat. The benchmark 10-year note was down 4/32 point, or $1.250 per $1,000 face value, at 99 10/32. Its yield rose to 2.830%