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The Ge Downgrade Arrives

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by Felix Salmon
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Mar 12 2009 9:59am EDT

The GE Downgrade Arrives

Back in January, when I said it was high time that GE should lose its triple-A credit rating, GE's stock was trading at a 12-year low of $12.55 a share. Yesterday, when S&P finally made the decision to downgrade the company, GE closed at $8.49, a further erosion of 32% in the share price. Meanwhile, the company's bonds, which were trading at 326bp over Treasuries in January, have gapped out all the way to 674bp over now. This downgrade only serves to ratify what the market already knew; it was frankly necessary for S&P to preserve what sliver of credibility it still retains.

GE stock is flat today; the downgrade was priced in. But Berkshire Hathaway is down. Could it be next?

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