Fitch Affirms Mubadala GE Capital at 'A'; Outlook Stable
The affirmation follows the recent announcement by MGEC of an agreement to sell most of its assets to MidCap Finco Ltd (MidCap), which in turn follows the April 2015 decision by General Electric Corporation (GE) to divest the majority of the operations of MGEC's 50% co-owner General Electric Capital Corporation (GECC). The other 50% of MGEC is owned by Mubadala Development Company PJSC (Mubadala; AA/Stable).
KEY RATING DRIVERS
IDRS AND SENIOR DEBT
Fitch expects the sale to MidCap to generate sufficient funds to cover MGEC's liabilities in full, and a portion of the proceeds to be used to redeem all of the company's outstanding debt. In the meantime, Fitch continues to see a strong capacity and propensity on the part of MGEC's two shareholders to support the company, in case of need. This is reflected in MGEC's IDRs being notched down by three levels from Mubadala's Long-term IDR. Fitch's view of GECC's creditworthiness has also been strongly factored into the ratings.
The standalone creditworthiness of MGEC is regarded by Fitch as weaker than the support-driven rating. However, a standalone assessment of MGEC is of limited relevance, in view of the important role that it has played for the shareholders, and continues to play pending the sale of its assets.
The Stable Outlook reflects Fitch's expectation of an ongoing ability and propensity on the part of the shareholders to support MGEC until the sale process has been completed and its obligations under its issued debt have been repaid.
IDRS AND SENIOR DEBT
The ratings are primarily sensitive, positively or negatively, to a change in the co-owners' perceived ability to support MGEC. Although not expected by Fitch, should any evidence emerge of a reduced propensity on the part of either shareholder to make that support available, the ratings could also be adversely affected.
Fitch expects to withdraw its ratings when the asset sale has been completed and MGEC's borrowings have been repaid. Should the sale for any reason not complete as expected, Fitch's ratings would be sensitive to the alternative plans decided upon by the shareholders in that scenario.