NEW YORK, Sept. 17 /PRNewswire/ -- Standard & Poor's Ratings Services said today that it revised the CreditWatch status of most of its ratings on the AIG group of companies-- including its 'A-' long-term counterparty credit ratings on American International Group Inc. and International Lease Finance Corp. (ILFC) and the 'A+' counterparty credit and financial strength ratings on most of AIG's insurance operating subsidiaries -- to CreditWatch developing from CreditWatch negative.
Standard & Poor's also said that it raised its short-term counterparty ratings on AIG, its guaranteed subsidiaries, and ILFC to 'A-1' from 'A-2'.
In addition, Standard & Poor's lowered the ratings on various subsidiaries' preferred shares to 'B' from 'BBB'; the ratings on the preferred shares remain on CreditWatch negative because of the increased risk of deferral of dividend payments due to the right of the U.S. government to veto dividend payments.
The 'BBB/A-3' counterparty credit rating on American General Finance Corp. is unchanged. The outlook is negative.
Yesterday, the Federal Reserve Bank of New York extended an $85 billion borrowing facility for AIG. The facility has a 24-month term and is intended to assist the company in meeting its financial obligations during that term. The facility is secured by a pledge of all of the assets of AIG and its nonregulated subsidiaries as well as AIG's stock ownership interest in its regulated subsidiaries. The U.S. government will also receive a 79.9% equity interest in AIG, giving it effective control of the company.
"The Fed's actions will provide AIG with substantial relief from its near-term liquidity constraints," noted Standard & Poor's credit analyst Rodney A. Clark. "We believe that the size of the facility greatly exceeds any near-term needs for liquidity." The amount drawn from the facility will affect decisions on which businesses might be sold, and the result could either favorably or unfavorably affect AIG's competitive position and operating performance.
Most of the ratings are on CreditWatch developing to reflect the significant uncertainty in the near term as to any impact of recent events on AIG and its ability to attract and retain business as well as uncertainty as to which businesses might be sold to repay AIG's borrowings from the Fed. "It is likely that the ratings on AIG and its various subsidiaries will move in different directions as these facts become more clear and strategic alignment within the insurance operations is more defined," Mr. Clark added. "The ratings on the preferred shares remain on CreditWatch negative because of the right of the U.S. government under the terms of the agreement to veto dividends on any preferred shares. Any action on that right is uncertain but could occur with little warning at the government's discretion."
Complete ratings information is available to subscribers of RatingsDirect, the real-time Web-based source for Standard & Poor's credit ratings, research, and risk analysis, at http://www.ratingsdirect.com/. All ratings affected by this rating action can be found on Standard & Poor's public Web site at http://www.standardandpoors.com/; select your preferred country or region, then Ratings in the left navigation bar, followed by Credit Ratings Search.
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