General Electric Credit Agreement

General Electric, famously known as GE, is a multinational conglomerate that provides technology, power, and financial services to a wide range of industries, from aviation to healthcare.

In 2018, GE signed a credit agreement with a consortium of banks led by JPMorgan Chase. The deal, worth $15 billion, was designed to provide GE with more financial flexibility by extending the maturities of its existing revolving credit facilities and term loans.

One of the key features of the agreement was the inclusion of a “covenant-lite” structure, which allowed GE to borrow money without having to meet certain financial performance metrics. This was a departure from the traditional credit agreement structure, which required borrowers to meet specific financial ratios and metrics to remain in compliance.

The covenant-lite structure was seen as a sign of the growing power of borrowers in the credit markets, as investors became increasingly willing to lend money to high-quality companies without stringent covenants.

The credit agreement also allowed GE to refinance its existing debt at lower interest rates, which would help to reduce its overall borrowing costs. The agreement was widely seen as a positive development for GE, which had been struggling with a range of issues in recent years, including a significant decline in its share price and concerns about its ability to generate consistent cash flow.

Overall, the GE credit agreement was an important milestone for the company, as it provided much-needed financial flexibility and allowed it to access capital on more favorable terms. The deal was also a reflection of the changing dynamics of the credit markets, as borrowers continued to exert more influence over the terms of their financing arrangements.