Standard & Poor’s Ratings Services and Fitch Ratings are welcoming the government financing American International Group Inc. has arranged while expressing uncertainty about the terms.

S&P, New York, says it has raised its short-term counterparty ratings on AIG, New York, to A-1, from A-2.

S&P also has increased the ratings on the company’s financial guarantee subsidiaries and its International Lease Finance Corp. 1 notch.

But S&P has lowered the ratings on some AIG subsidiaries’ preferred shares to B, from BBB.

The “CreditWatch” status for the ratings on the preferred shares continues to be Negative, because of the “increased risk of deferral of dividend payments due to the right of the U.S. government to veto dividend payments,” S&P analysts write in a discussion of the firm’s rating actions.

The BBB/A-3 counterparty credit rating on American General Finance Corp. is unchanged, and the outlook status for that rating is Negative.

S&P analysts say the CreditWatch status of most of their firm’s AIG ratings has changed to Developing, from Negative, 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 clearer and strategic alignment within the insurance operations is more defined,” says Rodney Clark, an S&P credit analyst.

S&P’s “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,” Clark says.

Any action on that right is uncertain, but could occur with little warning at the government’s discretion, Clark says.

Analysts at Fitch, Chicago, have held ratings on AIG and its subsidiaries steady but changed the “rating watch status” to Evolving, from Negative.

The change to Evolving status is “intended to communicate the highly dynamic nature of AIG’s current financial situation, which could evolve positively or negatively for different subsidiaries or securities,” the Fitch analysts write in a comment on their firm’s views.

Ratings, outlooks and watches for AIG securities and units could change as Fitch learns more about the terms of the finance arrangement AIG has negotiated with the Federal Reserve System, the analysts write.

AIG’s “most pressing” challenge is evolving from meeting immediate liquidity needs to managing the increase in financial leverage and the high cost of drawing from the revolving credit facility the Fed is providing.

“To provide funds needed to service debt obligations, Fitch believes that AIG will likely sell a significant number of its operating company subsidiaries, and that these sales may include subsidiaries that Fitch had previously viewed as core operations,” Fitch analysts write. “AIG needs to optimize operating company results under very difficult market conditions, in order to retain significant value in its subsidiaries that may be monetized in the future.”

The Fitch analysts say they think any subsidiary would be considered for sale.

“The ratings impact for any subsidiary that is ultimately sold would be greatly influenced by the credit quality of the buyer and terms of the sale,” the analysts write.