General Electric hit up the Fed’s new program to buy up commercial paper from issuers on the very first day it was open for business.
General Electric Co., the biggest U.S. issuer of commercial paper, said it accessed the new short- term funding facility the Federal Reserve introduced as part of an effort to ease the credit crisis.
The parent company and its GE Capital finance units registered as users of the Fed’s Commercial Paper Funding Facility last week to show support for the central bank’s new program. GE will determine how much to issue based on commercial- paper buyers’ need for liquidity, the company said last week when it announced plans to test the program.
The Fed is seeking to stem the credit-market seizure and revive demand for commercial paper, the short-term borrowing that companies use to finance day-to-day operations, by offering to buy 90-day debt of top-rated companies at a rate of 2.88 per cent. GE, a direct issuer, continued to sell paper without interruption as it has throughout the crisis, Wilkerson said.
“As we indicated, this was our plan,” Russell Wilkerson, a spokesman for the Fairfield, Connecticut-based company, said in an interview today. “We followed through on that.” GE isn’t disclosing the amount, Wilkerson said.
The stock is doing well today but already rumours are circulating. These days it seems that anyone who talks to the Fed gets hammered by the rumour mill. Today’s completely unsubstantiated, unchecked and possibly untrue rumour is so widely spread that we don’t feel bad about sharing it at all. Traders are all whispering about new writedowns at GE. For now, though, the shares are holding up so perhaps people are sceptical about the story.
NOW WATCH: Money & Markets videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.