UPDATE 2-GE may still lose 'AAA' rating after dividend cut

NEW YORK, Feb 27 (Reuters) - General Electric Co remained at risk of losing its valued 'AAA' rating on Friday after the conglomerate said it plans to reduce its dividend by 68 percent, saving about $9 billion a year.

Moody's Investors Service said it may still cut GE's rating and Standard & Poor's kept its outlook on GE negative, which indicates the rating may be downgraded within the next two years.

'The reduction in GE's common dividend will address some of the concerns regarding the stress on GE's cash flow,' Moody's analyst Richard Lane said in a statement. 'Nonetheless, Moody's is continuing its review of the ratings for possible downgrade.'

Analysts had cautioned that GE might have to sacrifice its dividend to keep the triple-A rating as it struggles with falling profit in a slumping economy.

On Friday, GE said it plans to cut the quarterly dividend by 68 percent to 10 cents a share, a move it said would give it more flexibility in the face of a recession. For details click on.

Although the dividend cut will help cash flow, prospects for the economy have deteriorated since S&P assigned the negative outlook in December, the rating agency said in a statement. S&P rates GE 'AAA,' the highest possible investment-grade rating.

GE's 'AAA' rating has been a key support for its finance arm, and a downgrade could make it more costly for GE Capital to borrow money.

(Reporting by Dena Aubin; Editing by Dan Grebler)

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