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AIG Sells $2 Billion in Bonds in First Debt Offering Since Government Rescue

Source: Daily Finance

Posted on 01 Dec 2010

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Insurance giant American International Group (AIG) sold $2 billion of bonds in its first debt offering since it was rescued in 2008, according to Bloomberg.

In a two-part sale, AIG issued three-year notes worth $500 million and 10-year bonds worth $1.5 billion. The yields on the bonds were much higher than comparable Treasurys. The 3.65% notes due January 2014 yield 295 basis points more than similar-maturity Treasurys, and the 6.4% debt due December 2020 was issued at a spread of 362.5 basis points. The spreads were also wider than companies with similar credit ratings, at 120 and 174 basis points, respectively.

The offering was an important test of whether investors think the insurer can stand on its own. Indeed, orders for the bonds "showed the pent-up demand for the AIG name," said Anne Daley to Bloomberg. Daley is managing director at Barclays Capital in New York, which helped underwrite the sale.