Read the prospectus for the bond. A prospectus is a legally mandated disclosure of possible investment hazards. You should be able to get one from your broker in person, or you can download one from their website. A reputable brokerage will not sell you a stock or bond without first providing you with a prospectus.
Are GE Capital bonds a safe investment?
Moody’s has given GE’s senior unsecured bonds a Baa 1 rating, which is a lower-tier investment-grade rating. The GE bonds examined by Barron’s yielded close to 4%, or around 0.1 percent to 0.2 percent higher than comparably rated corporate bonds. According to the bond market, GE bonds are a tad riskier.
What is the rating of GE bonds?
Fitch Ratings, New York, November 10, 2021: Pacific Gas and Electric Company’s (PG&E) First Mortgage Bonds have been granted a ‘BBB-‘/’RR2’ rating by Fitch Ratings (FMB). The FMBs are PG&E’s senior liabilities, ranking equal to and above the utility’s existing and future FMBs.
How can I go about purchasing European bonds?
Eurobonds can be purchased through worldwide stock markets in the same manner that most other bonds can. The Luxembourg Stock Exchange and the London Stock Exchange are now the two largest centers for eurobond investing, but there are numerous others across the world.
How much debt does General Electric have?
GE agreed to buy back nearly $25 billion in debt, up from the $23 billion it had planned. Between 2018 and 2021, GE will have repaid nearly $80 billion in debt, thanks to the additional debt repurchased. The previous debt payback objective was $75 billion.
When did General Electric stock split?
- In early 2023, GE Healthcare will be spun off, with GE keeping a 19.9% interest.
- In 2024, the GE Power, GE Renewable Energy, and GE Digital businesses will be combined and spun off.
- The financial flexibility provided by GE’s investments in AerCap, Baker Hughes, and (post-split) GE Healthcare will allow the firm to ensure that its renewable energy and power sector can have an investment-grade capital structure when it is spun off.
Because its current focus is on energy, it makes sense for GE Digital to be included in the power and renewable energy companies. Digital services and Internet of Things (IoT) capabilities, for example, are utilized to collect massive amounts of data that are then used to better maintain GE’s wind and gas turbines. At the same time, the Internet of Things enhances grid use.
What exactly is S&P investment grade?
Ratings firms investigate each bond issuer’s financial condition (including municipal bond issuers) and assign ratings to the bonds on the market. Each agency follows a similar structure to enable investors compare the credit rating of a bond to that of other bonds. “Investment-grade” bonds have a rating of BBB- (on the Standard & Poor’s and Fitch scales) or Baa3 (on the Moody’s scale) or higher. Bonds with lower ratings are referred to as “high-yield” or “junk” bonds since they are deemed “speculative.”
How can I purchase an international bond?
Investors who have an account that allows international trading can buy foreign bonds in the same manner they buy US bonds. Their broker supplies clients with a list of available bonds, which they can purchase at market price. However, transaction costs may be greater, and the bond selection may be limited compared to domestic issues in the investment country. Buying dollar-denominated or U.S.-based foreign bonds is one option. A foreign corporation may occasionally issue a bond in the United States that is valued in dollars. These so-called “Yankee bonds” provide exposure to a foreign corporation while also allowing for the purchase of a dollar-based bond in the United States. Companies can also issue bonds that are valued in dollars but are not issued in the United States; these are known as Eurodollar bonds.
Are foreign bonds available to Americans?
You can buy bonds issued by other governments and firms in the same way that you can buy bonds issued by the US government and companies. International bonds are another approach to diversify your portfolio because interest rate movements range from country to country. You risk making decisions based on insufficient or erroneous information since information is generally less dependable and more difficult to obtain.
International and developing market bonds, like Treasuries, are structured similarly to US debt, with interest paid semiannually, whereas European bonds pay interest annually. Buying overseas and developing market bonds (detailed below) carries higher risks than buying US Treasuries, and the cost of buying and selling these bonds is often higher and requires the assistance of a broker.
International bonds subject you to a diverse set of dangers that vary by country. Sovereign risk refers to a country’s unique mix of risks as a whole. Sovereign risk encompasses a country’s political, cultural, environmental, and economic features. Unlike Treasuries, which have virtually no default risk, emerging market default risk is genuine, as the country’s sovereign risk (such as political instability) could lead to the country defaulting on its debt.
Furthermore, investing internationally puts you at risk of currency fluctuations. Simply put, this is the risk that a change in the exchange rate between the currency in which your bond is issuedsay, eurosand the US dollar would cause your investment return to grow or decrease. Because an overseas bond trades and pays interest in the local currency, you will need to convert the cash you get into US dollars when you sell your bond or receive interest payments. Your profits grow when a foreign currency is strong compared to the US dollar because your international earnings convert into more US dollars. In contrast, if the foreign currency depreciates against the US dollar, your earnings would decrease since they will be translated into less dollars. Currency risk can have a significant impact. It has the ability to convert a gain in local currency into a loss in US dollars or a loss in local currency into a gain in US dollars.
Interest is paid on some international bonds, which are bought and sold in US dollars. These bonds, known as yankee bonds, are often issued by large international banks and receive investment-grade ratings in most cases. Indeed, credit rating agencies such as Moody’s and Standard & Poor’s, which review and grade domestic bonds, also offer Country Credit Risk Ratings, which can be useful in determining the risk levels associated with international and emerging market government and corporate bonds.
What makes a Eurobond different from a foreign bond?
International bonds are divided into three categories: domestic, euro, and foreign. The issuer’s country (domicile), the investor’s country, and the currencies utilized are used to divide the groups.
- Domestic bonds are issued, underwritten, and then traded using the borrower’s country’s currency and rules.
- Eurobonds are bonds that are underwritten by an international corporation and traded outside of the country’s domestic market.
- Foreign bonds are issued in a domestic country by a foreign corporation using the local country’s legislation and currency.
- Domestic bonds are issued by a British corporation in the UK, with the principle and interest payments denominated in British pounds.
- Eurobonds: In the United States, a British firm issues debt with principal and interest payments denominated in pounds.
- Foreign bonds are debt issued by a British corporation in the United States, with principal and interest payments denominated in dollars.
Dollar-denominated Bonds
Dollar-denominated bonds are issued in US dollars and provide investors with more options to diversify their portfolio. Eurodollar bonds and Yankee bonds are the two types of dollar-denominated bonds. The distinction between the two bonds is that Eurodollar bonds are issued and traded outside the United States, whilst Yankee bonds are issued and traded within the United States.
Eurodollar bonds
Eurodollar bonds account for the majority of the Eurobond market. A Eurodollar bond must be written by an international corporation and denominated in US dollars. Eurodollar bonds cannot be sold to the general public in the United States because they are not registered with the Securities and Exchange Commission. They can, however, be sold on the secondary market.
Despite the fact that Eurodollar bonds are included in many U.S. portfolios, U.S. investors do not engage in the market.
Is GE in over its head in debt?
General Electric announced its largest asset sale to date in March. GE Capital will sell its GECAS airplane leasing arm to top competitor AerCap for $31 billion in cash, $6 billion in equity, and $1 billion in cash or notes.
The revenues of this transaction will be used by GE to help support an estimated $30 billion in debt repayments this year. However, the purchase will not lessen the company’s reported leverage in the near future. General Electric intends to incorporate its GE Capital subsidiary and its debt into the core industrial business for financial reporting purposes after the GECAS sale is completed.
As a result, the corporation expects to have $70 billion in gross debt by the end of 2021. (including its pension deficit). This might result in a leverage ratio of roughly 6, which is more than double its long-term leverage target of 2.5 times EBITDA.