Moody’s Investors Service downgraded the long-term issuer rating of GE Capital Global Holdings to A2 from A1. The long-term ratings of GE Capital’s subsidiaries were also downgraded.

The outlook for the ratings is stable. This follows Moody’s downgrade of the long-term issuer rating of parent General Electric (GE) to A2 from A1, with a stable outlook.

Moody’s downgraded GE Capital’s ratings based on the downgrade of GE’s ratings. GE guarantees all of the traded debt of GE Capital and its subsidiaries on an unconditional and irrevocable basis.

GE has historically exhibited strong implicit and explicit support of its finance operations, including through debt guarantees, capital injections and indemnifications. GE also provides GE Capital with $25.3 billion of borrowing capacity on an unconditional and irrevocable basis. On written request from GE Capital, GE will borrow under its available committed bank credit facilities and on-lend the amounts to GE Capital, without any restrictions regarding use of the funds. Moody’s expects that GE will support future debt issued by GE Capital and its subsidiaries, either through a guarantee or support agreement, though the company doesn’t anticipate needing to issue debt until 2019.

GE Capital’s Baa2 stand-alone credit profile incorporates its significantly reduced scale through divestiture of non-core businesses, the franchise positioning and operating strength of its continuing businesses and the company’s liquidity and capital strength. GE Capital’s downsizing was largely completed by early 2017, resulting in the company having a smaller risk footprint and significantly reduced exposure to capital markets funding, but increased asset concentration and potentially higher earnings volatility. Risks are mitigated by the company’s strong liquidity profile.

GE Capital maintained a strong capital position during its transformation but has since migrated its leverage to a higher but still adequate level. The firm’s ratio of tangible common equity to tangible managed assets measured 11.1% at June 30, 2017 (reflecting Moody’s standard and analytical adjustments) compared to 12.8% at December 30, 2016.

GE Capital’s ratings could be upgraded if GE’s ratings are upgraded and if GE’s support of GE Capital, including future debt issuance, remains strong. A downgrade of GE Capital’s ratings could result from a weakening of GE support or weaker than anticipated support of future debt issuance. Materially weaker liquidity or a material increase in leverage, a decline in profitability or reversal of asset quality improvements for a sustained period of time, or a downgrade of GE’s ratings could also contribute to a ratings downgrade.