NEW YORK (Reuters) – General Electric’s (GE.N) finance arm on Thursday launched a $5.5 billion debt sale backed by the Federal Deposit Insurance Corp, IFR reported.
GE Capital is planning to offer $1 billion in 2-year floating-rate notes, expected to price at a spread of 63 basis points over the 3-month London interbank offered rate.
It will offer a second tranche of $1 billion of 3-year floating-rate notes at 3-month Libor plus 93 basis points, and a third tranche of $3.5 billion of 3-year fixed-rate notes at midswaps plus 93 basis points.
The offering will push the total amount of debt sold under the FDIC guarantee program to more than $50 billion, according to data from Barclays Capital and Reuters.
“The primary point to be made for the issuers is that it gives them access to the market, and prior to this they didn’t have access,” said Spencer Lee, head of the trading desk at SCM Advisors in San Francisco.
The government’s Temporary Liquidity Guarantee Program fills a financing gap for banks shut out of the corporate bond market by skyrocketing yields. Backed by the Federal Deposit Insurance Corp, the debt has garnered top triple-A ratings, lowering borrowing costs dramatically for participating banks.
GE Capital’s offering is being managed by Bank of America Securities, Barclays, Citigroup, Goldman Sachs and Morgan Stanley. Pricing is expected later on Thursday. (Reporting by Ciara Linnane; additional reporting by Dena Aubin, Editing by Chizu Nomiyama)