Microeconomics Research Paper

Posted by admin on Nov 2, 2011 in Sample essays |

Custom essay writing help: Microeconomics Research Paper

The article I chose was one out of The Wall Street Journal, which covers the topic of how GE Capital, GE’s financial unit plans to sell $50 billion in bonds, just days after investors bought $11 billion in new bonds which is the largest in the U.S. ever. This raises some eyebrows because GE may not be dealing honestly with investors.

This may become a bigger deal than most might think considering the company that is taking on GE, one of the biggest players in the corporate-bond market, is the world’s largest bond fund (Pacific Investment Management). This may end up hurting both of these very large bond market corporations.

The hurt that this may put on the Pacific Investment Management is that there manager, Bill Gross whose $250 billion under management and stellar track record makes him the bond worlds Warren Buffet this would make it the first time that Mr. Gross has went so aggressively after one of the big names in the bond market.

This may hurt GE in the way that Pacific Investment Management just dumped $1 billion in GE commercial paper. If others follow which is sometimes the case, GE’s borrowing costs could go up, hurting its bottom line. Also Mr. Gross said about GE ” The corporations honesty remains in doubt.” He also said “GE’s Capital is vulnerable because it depends on the confidence of investors to keep its financing costs down.”

Also some more interesting information is that GE would like to cut its short-term financing to between 25% to 30% of its total debt, from nearly half of last year’s 49%. Also GE is planning to rebalance the debt. Mr. Sherin said, ” Our plan to rebalance the debt is to issue more long-term debt, increase our bank lines and the rating agencies have agreed to…

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