NEW YORK (Standard & Poor's) May 12, 2008--Standard & Poor's Ratings Services
said today that it assigned its 'A' junior subordinated debt rating to
American International Group Inc.'s (NYSE:AIG) $5 billion of equity units.
Standard & Poor's also said that it placed this rating on CreditWatch
with negative implications because all other AIG ratings are on CreditWatch.
Each equity unit consists of a stock-purchase contract and a beneficial
interest in three series of junior subordinated debentures, due in 2041. In
2011, AIG will remarket the three tranches of junior subordinated notes on
three different dates, with the proceeds used to satisfy the obligation under
the share-purchase agreements.
The 'A' rating is two notches below the 'AA-' counterparty credit rating
on AIG, which reflects the subordinated nature of the securities and the risk
of deferral of interest payments as well as the market risk borne by investors
under the share purchase contract.
The capital raised through the issuance of the equity units constitutes a
portion of the $12.5 billion of new capital raising announced by the company
on May 8. "The ratings will remain on CreditWatch pending the completion of
the capital raise and our evaluation of whether the amount raised is
sufficient to justify the current ratings," said Standard & Poor's credit
analyst Rodney Clark. "A higher amount would likely result in the ratings
being affirmed and removed from CreditWatch, while a lower amount could result
in the ratings being lowered by one notch."
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 www.ratingsdirect.com. All ratings
affected by this rating action can be found on Standard & Poor's public Web
site at www.standardandpoors.com; select your preferred country or region,
then Ratings in the left navigation bar, followed by Credit Ratings Search.
Analytic services provided by Standard & Poor's Ratings Services (Ratings Services) are the result of separate activities designed to preserve the independence and objectivity of ratings opinions. The credit ratings and observations contained herein are solely statements of opinion and not statements of fact or recommendations to purchase, hold, or sell any securities or make any other investment decisions. Accordingly, any user of the information contained herein should not rely on any credit rating or other opinion contained herein in making any investment decision. Ratings are based on information received by Ratings Services. Other divisions of Standard & Poor's may have information that is not available to Ratings Services. Standard & Poor's has established policies and procedures to maintain the confidentiality of non-public information received during the ratings process.
Ratings Services receives compensation for its ratings. Such compensation is normally paid either by the issuers of such securities or third parties participating in marketing the securities. While Standard & Poor's reserves the right to disseminate the rating, it receives no payment for doing so, except for subscriptions to its publications. Additional information about our ratings fees is available at www.standardandpoors.com/usratingsfees.
