GE outlook cut to Negative by S&P on virus hit (NYSE:GE)

S&P revises its credit outlook on General Electric’s (NYSE:GE) to Negative from Stable, citing greater uncertainty in the pace of deleveraging due to the negative effects on its aviation business from the coronavirus.

The move means GE’s BBB+ credit rating, which is three notches above “junk” territory, is at greater risk of a downgrade.

“The outlook revision reflects the potential that GE may be unable to reduce debt leverage to below 3.5x in 2021, should aviation markets fail to start recovering later this year, perhaps in conjunction with a deeper than expected economic recession and lengthy recovery worsened by lingering social distancing dynamics,” S&P Global says.

Also, Boeing’s 737 MAX could fail to return to service this year in a worst case scenario, causing further reductions in GE’s engine production for the MAX.

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