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AIG Preps for Bond Sale, the First One Post Bailout

Source: Wall Street Journal

Posted on 19 Aug 2010

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According to the Wall Street Journal, American International Group, Inc. (AIG) is gearing up for a bond sale, the first debt offering since the financial crisis during which the insurer nearly went bankrupt.

The success of the venture could be a strong indicator of whether investors belive that AIG is truly ready to regain its independence from the government and repay its massive debt to the U.S. taxpayers, says the Journal. Other companies that received government bailouts have been required to prove that they can raise capital on their own before repaying U.S. companies.

A small bond sale could indicate that the company has access to funding outside of the government.

Some of AIG’s subsidiaries have managed to raise money from the credit markets recently. For example, AIG’s aircraft leasing unit, International Lease Finance Corp is to sell around $4 billion in loans and bonds to help repay its debt to its parent.

According to the Journal, AIG has expanded on an existing registrations statement for securities to include debt, which is a possibly indication that the company could try to sell bonds or other securities in the future.

AIG did not say when it will try to raise the money, but sources told the Wall Street Journal that the firm could issue new debt before the end of the year.