Case 12-5

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June 3, 2014 GE Tuesday Training GECA- GE Capital Americas: * Many business segments within this vertical. Leasing transactions that are smaller in monetary size; 25 million is max deal. * Healthcare, financial services, financing equipment, venture capital deals, fleet services, equity financing. * Equipment Financing: Loans, Leasing, Sale Leasebacks, Equipment Management and Remarketing * Vendor Financing: solutions to enhance manufactures management position. * Franchise Financing: Financing new locations, acquisitions, reimaging, debt restructuring, refinancing. Franchise restaurants, chain restaurants and limited service hotels. * Fleet Services: rental car companies where they want to lease fleets of…show more content…
* Swap rate is the rate at which banks trade money; constantly changing. * Loan for a marina 100 MM USD 5 years 9:1 (90% debt, 10% Equity) * Swaps + 500….. 600 BPS * GE’s investment is only 10%, GE costs of funds 500 MM, margin is 400 MM. * ROI and ROE (20 ROE will get deal done, if not reached the deal wont be completed) GECC Funding- GE Corporate Capital Funding * Raise Funding for GE and GE Capital, maintain adequate liquidity and capital to support strong ratings safety and soundness. * Treasury Mix 75% Cash, 76% Debt; Financial Services Asset is Cash and its Liability is also Cash. * Finance Receivables and Investments are $s owed to GECC, generates interest expense on P&L. * Debt is $s owed to others, generates interest expense on P&L. * In financial services if you miss a coupon payment the company is dead, must sell off assets to pay bondholders. * Basis point is 1% of 1%, cash makes 3 Basis Points or .003% * Interest earned – Interest Paid = Net Interest Margin – Losses, Operating Expenses, etc. = Net Income * NIM is difference between Earned and Paid Interest * Net Income is returned to shareholders; GE Capital shareholders are GE Corporate. * Negative NIM is bad in return * Instrument Types
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