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.