If GE Debt Gets Junked, Markets Have Reason to Shudder

Holders of General Electric bonds are preparing for one of the world’s biggest borrowers to be downgraded to junk. To get a sense of what that might do to the markets, take a look back to the turmoil caused by the 2005 downgrades of General Motors and Ford—but worry that this time it might be worse because so many companies have been on a debt binge.

Back in 2005 it was easier for the overall market to shrug off the troubles in credit, because corporate debt—excluding the banks—was under control, with the boom in borrowing…

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