WASHINGTON - March 12, 2009 - General Electric Co. lost its prized top credit rating from Standard & Poor's over fears of rising loan losses and lower earnings at its lending arm.

The credit rating agency lowered GE's long-term debt ratings to AA+ from AAA Thursday, a one notch reduction that markets had long expected. The move means it will be more expensive for GE to raise money in the credit markets.

Company shares rose $1.01, or nearly 12 percent, to $9.50 in morning trading after the announcement. Shares had lost about half their value this year, pushed down by investors frightened by the grim outlook for GE's lending arm, GE Capital.

Many analysts had expected a much deeper ratings cut, given GE Capital's struggles with rising loan losses and fears that more write-downs are looming. And while GE has said defending its coveted credit rating was a priority, CEO Jeff Immelt recently said he was prepared to fund the company at a lower level.

“I don't believe GE is surprised to see this,” said Dilip Sarangan, an analyst with Frost & Sullivan.

GE Capital faces higher losses on its loans in areas such as real estate, while the global financial crisis worsens, S&P said. If it stood on its own, the ratings agency would give GE Capital a much lower 'A' rating. The agency considers GE's outlook stable.

The Fairfield, Connecticut-based company, whose wide-ranging business include jet engines, the NBC network, and loans for energy projects, was one of just six non-financial companies that hold the top rating from S&P. GE was first given the AAA rating in 1956.