General Electric Co. (NYSE: GE) has made many efforts to streamline its operations because GE wants to be valued as an industrial conglomerate rather than as a conglomerate held back by bank and consumer finance valuations. Standard & Poor’s has maintained GE’s AA+ corporate credit rating, but it has now revised its outlook to Negative.

This is not a credit rating downgrade, but it could remind at least some long-term investors of way back when GE lost its AAA rating. 24/7 Wall St. has always wondered if this might lead to an overshoot or whether there could be credit implications ahead. After all, there is big money in lending and collecting interest — so long as economic times are good. GE’s current plan is also in the tens of billions of dollars to return capital to shareholders via dividends and buybacks. What if it overshoots?

It turns out that S&P is worried about Trian Fund Management’s $2.5 billion stake in GE. While it is supportive of fewer finance operations, Trian said earlier this week that it sees an opportunity for GE to return even more capital than the tens of billions of dollars that have been indicated. This is above the expectations of S&P, and the negative outlook reflects S&P’s expectations that GE could adopt a less conservative financial policy than has been built into the AA+ rating.

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For those who want a lot of capital returned by GE but want it to keep its very conservative balance sheet strong, this could be good news. CEO Jeff Immelt has been open and receptive to Trian on the public side of the equation, but this warning from S&P could give Immelt and GE’s board of directors at least a bit of a stronger hand in denying a request to return too much of the capital to shareholders. After all, weakening a credit profile for a one-time gain could hurt the company in the long term when future recessions come up (and we likely all know by now that they will).

S&P’s negative outlook is not warning that the credit rating is at risk of an immediate downgrade. The credit ratings agency even noted that GE is expected to develop and clarify its long-term leverage targets within the next 12 to 18 months. The warning of a credit downgrade is if it looks likely that GE will pursue increased buybacks or acquisitions that it significantly increases its leverage.

Another potential red flag for S&P would be if GE narrows its focus in the industrial end markets in a significant enough of a move that would reduce its scope and diversity.

S&P did leave Immelt and GE’s board an out here that would remove the negative outlook. The outlook could be revised to “stable” if GE articulates a financial policy that likely would cause GE’s leverage metrics to remain with S&P’s expected range for a modest financial risk profile.

The good news here is that GE’s stock price might not care about this potential negative development. The bad news — well, maybe it is good news — is that S&P has just given GE the ammunition to keep Trian from getting too ambitious on too much capital being returned in a manner that it would hurt GE’s long-term corporate balance sheet metrics.

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GE shares were up 1.4% to $27.68 Wednesday morning. Its consensus analyst price target is $29.62 and GE has a 52-week range of $19.37 to $28.68.

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