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Text size [+][-]  Friday November 20 2009GLOBAL EDITION

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28 Oct 2008 19:29

Ignoracles



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General Electric tapped the Federal Reserve’s new commercial paper facility for a loan under $5bn.

On October 27, the annual cost of five-year protection against a GE Capital default cost 552.5bp. Insurance on triple-A rated Johnson & Johnson cost 52.5bp, according to Bloomberg.

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The conglomerate enjoys triple-A ratings – but markets don’t seem to care. Its debt trades at low investment grade levels and its credit default swaps are in junk territory. That’s partly due to technical factors. But it also shows how irrelevant ratings have become.

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