General Electric Company Financial Services Funding Policy

Transcription

1 General Electric Company Financial Services Funding Policy "This document contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of Forward-looking statements may be identified by words such as "expects", "anticipates","intends", "plans", "believes", "seeks", "estimates", "will" or words of similar meaning and include, but are not limited to, statements about the expected future business and financial performance of GE. Forward-looking statements are based on management's current expectations and assumptions, which are inherently subject to uncertainties, risks and changes in circumstances that are difficult to predict. Actual outcomes and results may differ materially from these expectations and assumptions due to changes in global political, economic, business, competitive, market, regulatory and other factors. We undertake no obligation to publicly update or review any forward-looking information, whether as a result of new information, future developments or otherwise."

2 GE Treasury Overview Fixed Rate Strong Partnership With Businesses Optimized Funding Commercial Paper Financial Assets Ensure Sufficient Capacity Exists to Fund Growth Provide Businesses With Tools to Help Compete Floating Rate Debt Fixed Rate Debt Asset Securitization Deposits Floating Rate Solid Risk Management & Controllership Centralized Cash Management Match Funded (Currency, Rate & Duration) No Speculative Trading Not Profit Center Not a bank - Debt issuance is primary funding source 2/

3 Legal Structure & Ratings Commitment Explicit support GE support to ensure GECC 1.1x fixedcharge coverage ratio Guarantee of up to $1B subordinated debt Implicit support examples Acquisition capital Heller (~$2.5B) General Electric Company AAA/Aaa 100% General Electric Capital Services, Inc. 100% Owns all of GE s financing assets Primary GE Issuer/Guarantor General Electric Capital Corporation AAA/Aaa GECS legal framework and support agreements unchanged Global Insurance Holdings Remaining Insurance 3/

4 Matched Funding GE s Financial Services businesses match fund assets and liabilities to ensure financing spreads are maintained despite changes in interest rates Equipment Loan in U.K. Liability Asset & Equity Amount Currency No Currency Risk Term 3 Yrs. 3 Yrs. No Term Risk Type Fixed Fixed No Interest Rate Risk Equipment Loan in U.S.$ Liability Asset & Equity Amount $10 $10 Currency $U.S. $U.S. No Currency Risk Term 3 Yrs. 3 Yrs. No Term Risk Type Floating Floating No Interest Rate Risk 10% Revenue 8% 6% 4% 2% 0% Financing Spread Borrowing Cost 10% 8% 6% 4% 2% 0% Revenue Financing Spread Borrowing Cost We eliminate non-credit risk 4/

5 GECS funding ($ in billions) FIN 46 LT debt LT <1 yr. Other Comm l. paper Debt composition $ $ $426 $ $415 $ Q'05 3Q'06 4Q'06 Bank lines $57 $60 $60 CP coverage 65% 67% 64% 60% 17% 23% Unsecured term issuances $60 Maturities $36 $84 Maturities $39 '05 '06 '07 plan Highlights ~$75 Maturities $44 Strong business asset growth drove $70B debt growth (ex. Fin 46) since 4Q 05 Global presence unsecured term issuances in 19 currencies 43% non-u.s. Spreads stable despite heavy issuance consistent investor development $3B bank lines & $3B asset put facility added to enhance CP capacity & liquidity Solid execution diversified investor base & strengthened liquidity 5/

6 Continued global access CAD 3% AUD 4% JPY 5% CHF 3% $60B $84B NZD 3% Euro 13% GBP 14% Others 3% USD 52% Issued in 16 currencies -Non USD 48% vs. 44% in 04 New currencies: MXN and TRY Maturities issued: 1 yr 32 yrs Continued to diversify investor base managed market supply CAD 3% AUD 4% JPY 3% CHF 3% Euro 17% NZD 1% GBP 9% Issued in 19 currencies Consistent approach to global funding Others 3% USD 57% Consistent funding mix with % non-usd Continued support from diverse investor base, stable credit spreads 6/

7 Rating agency relationship management Day-to-day interaction with Treasury team Proactive management of relationship Annual rhythm Segment reviews Company s senior leadership Ongoing communication Business reviews Regular rhythm enables proactive communication and transparency Capital allocation Multiple sessions Capital adequacy models Progress on parent support pay-down Deep dive on product leverages Treasury and business participation Initiated by rating agencies and / or GE Risk management Insurance reviews FAS133 restatement Specific items Liquidity reviews Solid Triple A We don t take it for granted Annual sessions Review of liquidity strategy and stress scenarios Moody s liquidity model 7/