GE Capital says it is open for business, despite incessant rumors to the contrary. The mid-market lending group has been labeled as being “on the sidelines” by both competitors and sponsors, but spokesman Stephen White insists that a slowdown doesn’t equal a shutdown.
“[We’re] funding less new business than we were in previous quarters and expect that will continue for the next several weeks,” White says. “We see that changing and being a short-term situation.”
He may not admit it directly, but judging by conversations I’ve had with other lenders and sponsors over the past few weeks, GE, like many in the middle market, is not exactly entertaining new deals until the new year. They fall into the second of about five categories of senior lenders these days:
- The inactive, closed-for-business-till-the-new-year firms.
- Firms that, technically, are open, but not active, since they have adopted standards so narrow and strict that they basically exclude 99% of all potential deals.
- The firms that simply ran out of money. They may have had a warehouse facility that has no more capacity. They may need to buy a bank holding company for better access to capital.
- Firms that are actually open for business. Literally a handful, and they’re being almost as picky as the firms in category number two.
- BDCs, which have access to capital through their publicly traded stock and have wide mandates and flaxibility with unitranche, one-stop loans, and mezzanine. However, judging by the dismal performance of financial stocks, they are likely staying very picky as well.
- Canadian Banks. They’re still active.
It’s also worth noting that The Wall Street Journal today reported GE Capital’s parent company, General Electric, may be eligible for federal bailout money, likely in the form of a stake sale. The company’s stock rose 2.6% on the news, despite saying that it “doesn’t expect” a Treasury investment.