Bloomberg reported that according to Barlclays Plc., GE Capital is poised to become a better risk than JPMorgan Chase in the $24.8 trillion credit-default swap market for the first time in more than four years.
The Bloomberg report quotes Brian Monteleone, a Barclays credit analyst in New York saying, “The fact that GECC isn’t a derivatives player and doesn’t have the swings of trading businesses provides investors with some comfort. When you think about the direction of the two business models, investors are increasingly concerned about the derivatives and investment-banking businesses.”
The cost to protect the debt of GE Capital with credit- default swaps was 144 basis points yesterday, compared with 119 basis points to insure debt from New York-based JPMorgan, according to data compiled by Bloomberg. A basis point equals $1,000 annually on a contract protecting $10 million of debt.
According to the report, GE Capital is gaining favor as parent company Chief Executive Officer Jeffrey Immelt shrinks the unit and exits businesses including European mortgage lending, Monteleone said in a telephone interview.