Under the 2008 bailout of AIG, the plan was that when the insurer paid down the credit line, it would reduce the amount of credit available, said sources. Last year, the Fed made an exemption on $3.6 billion of money from asset sales. Now it has decided that the relief may not be necessary any more.
AIG had $13.3 billion in credit on the line as of June 30. The company's CEO Robert Benmosche said earlier this month that he expects to make "meaningful progress" in paying down the credit line this year.
"This means there's little anticipation AIG will need the credit," said Clark Troy, an analyst with research firm Aite Group. “It’s a step in the right direction in terms of making AIG less dependent on federal aid.”
Under terms of AIG’s 2008 rescue, paying down the line was supposed to lower the amount of credit available. The Fed gave an exemption in 2009 on $3.6 billion in proceeds from asset sales and has decided this year that the relief may no longer be necessary, said the person, who declined to be identified because the plan isn’t public. AIG had $13.3 billion in credit remaining on the line as of June 30.
“This means there’s little anticipation AIG will need the credit,” said Clark Troy, a senior analyst based in Chapel Hill, North Carolina, for Aite Group, a research firm.
Chief Executive Officer Robert Benmosche said this month he is in talks with U.S. regulators to return AIG to independence and expects to make “meaningful progress” in repaying the credit line this year. The insurer owed $23.5 billion on the credit line as of Aug. 18, compared with about $27 billion at the end of April, according to Fed data.
AIG may sell bonds for the first time since its 2008 government rescue to help repay its $182.3 billion bailout package, according to an Aug. 9 filing.