Recipient email addresses will not be used in mailing lists or redistributed.
Use semicolon to separate each address, limit to 20 addresses.
characters you see
You have successfully sent the research.
Please note: some research requires a paid subscription in order to access.
Already a customer?
Don't want to see this again?
Accept our to continue to Moodys.com:
AND SCROLL DOWN!
By clicking “I AGREE” [at the end of this document],
you indicate that you understand and intend these terms and conditions to be
the legal equivalent of a signed, written contract and equally binding, and
that you accept such terms and conditions as a condition of viewing any and all
Moody’s information that becomes accessible to you [after clicking “I AGREE”] (the
“Information”). References herein to “Moody’s” include Moody’s
Corporation, Inc. and each of its subsidiaries and affiliates.
Terms of One-Time Website Use
you have entered into an express written contract with Moody’s to the contrary,
you agree that you have no right to use the Information in a commercial or
public setting and no right to copy it, save it, print it, sell it, or publish
or distribute any portion of it in any form.
acknowledge and agree that Moody’s credit ratings: (i) are current opinions of
the future relative creditworthiness of securities and address no other risk; and
(ii) are not statements of current
or historical fact or recommendations to purchase, hold or sell particular
securities. Moody’s credit ratings and
publications are not intended for retail investors, and it would be reckless
and inappropriate for retail investors to use Moody’s credit ratings and
publications when making an investment decision. No
warranty, express or implied, as the accuracy, timeliness, completeness,
merchantability or fitness for any particular purpose of any Moody’s credit
rating is given or made by Moody’s in any form whatsoever.
3. To the extent permitted by law, Moody’s and its directors,
officers, employees, representatives, licensors and suppliers disclaim
liability for: (i) any indirect, special, consequential, or incidental losses
or damages whatsoever arising from or in connection with use of the
Information; and (ii) any direct or compensatory damages caused to any person
or entity, including but not limited to by any negligence (but excluding fraud
or any other type of liability that by law cannot be excluded) on the part of
Moody’s or any of its directors, officers, employees, agents, representatives,
licensors or suppliers, arising from or in connection with use of the
4. You agree to read [and
be bound by] the more detailed disclosures regarding Moody’s ratings and the
limitations of Moody’s liability included in the Information.
5. You agree that any disputes relating to this agreement or your use of
the Information, whether sounding in contract, tort, statute or otherwise,
shall be governed by the laws of the State of New York and shall be subject to
the exclusive jurisdiction of the courts of the State of New York located in
the City and County of New York, Borough of Manhattan.
18 Dec 2008
Moody's comments on AIG's restructuring progress; review continues
New York, December 18, 2008 -- Moody's Investors Service maintains its present ratings and continues
to monitor the restructuring and divestiture efforts of American International
Group, Inc. (NYSE: AIG -- senior unsecured debt
at A3/review down, short-term debt at Prime-1/review
down), while noting that AIG has made important strides in the restructuring
plan announced on November 10, 2008. In cooperation with
the US Treasury and the Federal Reserve Bank of New York (the NY Fed),
AIG has revised its capital structure, terminated its US securities
lending program, and materially reduced its exposure to credit default
swaps (CDS) written on multi-sector collateralized debt obligations
(CDOs). These developments are positive in Moody's view,
helping to limit future strains on AIG's liquidity and capital.
Nevertheless, the company faces significant challenges in its efforts
to divest non-core operations, unwind the remainder of AIG
Financial Products Corp. (AIGFP) and preserve the values of major
operating units. These challenges are heightened by the weak global
economy and distressed financial markets.
Moody's continuing review of the ratings on AIG and its subsidiaries
will focus on: (i) the firm's evolving liquidity profile,
including the level of borrowing under the NY Fed's credit facility;
(ii) the anticipated timing and amounts of cash proceeds generated from
asset sales; (iii) development of a comprehensive plan to unwind
AIGFP, including estimated costs and timing; (iv) the performance
of major operating units, whether they are core operations or targeted
for sale; and (v) the resulting financial profile (e.g.,
financial leverage and fixed charge coverage) of AIG following the asset
sales. For those operations being sold, Moody's will
consider their intrinsic financial strength, the Government's
interim support and the rating profiles of potential acquirers.
Moody's expects to resolve the AIG rating review during the first
quarter of 2009.
AIG, the US Treasury and the NY Fed have largely completed all four
of the transactions announced on November 10, as follows:
(i) AIG issued $40 billion of redeemable perpetual preferred stock
to the US Treasury under the Troubled Assets Relief Program, using
proceeds to reduce borrowings under the original secured revolving credit
facility provided by the NY Fed in September; (ii) AIG and the NY
Fed amended this credit facility from an $85 billion two-year
revolver to a $60 billion five-year revolver with more favorable
pricing for AIG; (iii) AIG's US life insurance subsidiaries
sold all remaining residential mortgage-backed securities from
their US securities lending collateral pool to a newly formed entity called
Maiden Lane II LLC (ML II), and they have terminated the US securities
lending program as well as the $37.8 billion securities
lending arrangement established with the NY Fed in October; and (iv)
a newly formed entity called Maiden Lane III LLC (ML III) has purchased
$46.1 billion of multi-sector CDOs on which AIGFP
wrote CDS, and the related CDS contracts have been terminated.
ML III has entered into agreements to purchase an additional $7.4
billion of multi-sector CDOs (for a total of $53.5
billion purchased or under agreement), which will allow for termination
of the related CDS contracts. Each of ML II and ML III has been
funded by a large tranche of senior financing provided by the NY Fed and
a smaller tranche of subordinated financing provided by AIG. Cash
proceeds from the assets in ML II and ML III will be applied first to
the NY Fed's senior financing and then to AIG's subordinated
financing, with any additional amounts shared between the NY Fed
(majority share) and AIG (minority share).
Moody's believes that AIG's revised capital structure and
the ML II and ML III transactions have helped to stabilize the firm's
financial flexibility. The new capital structure not only provides
lower-cost and longer-term funding, but it may also
give various constituents -- customers, distributors,
employees, creditors, potential business buyers -- greater
confidence that AIG can complete its asset sales and repay the NY Fed's
credit facility within a reasonable time frame. The ML II and ML
III transactions provide downside protection to AIG in terms of further
price declines, losses and liquidity demands related to securities
lending or to the multi-sector CDS/CDO portfolio. Moreover,
the termination of the securities lending program may make the US life
insurance subsidiaries more attractive to potential buyers.
Nevertheless, AIG faces significant challenges in its restructuring
and divestiture efforts. Moody's believes that the pricing
and timing of planned asset dispositions have been hampered by the weak
global economy and limited availability of financing alternatives for
potential business buyers. During the past few months, AIG's
core and non-core insurance operations have seen deterioration
with respect to sales and persistency of business. Moody's
expects that lower business volumes combined with the costs of retaining
key employees will hurt profit margins. Material delays in the
divestiture process could cause significant erosion of the values of operations
to be sold as well as core operations to be retained, in Moody's
AIG also faces the complex task of unwinding the remaining operations
of AIGFP (beyond the multi-sector CDS/CDO portfolio). The
costs and duration of this process are difficult to estimate and could
be substantial. Moody's believes that the exposures at AIGFP
represent a source of additional earnings and liquidity risk for AIG given
the large and diversified derivatives book. Such exposures include
CDS written for regulatory capital or corporate arbitrage purposes,
where further market deterioration and/or changes in valuation methods
could lead to sizable market valuation losses and collateral requirements.
Finally, AIG's ultimate capital structure, assuming
completion of the global divestiture plan and repayment of the NY Fed's
credit facility, would still likely include substantial debt and
hybrid securities with large fixed charge requirements. Moody's
believes that AIG's financial leverage and coverage metrics at that
time, absent other capital raising or restructuring initiatives,
would be weak for the single-A debt rating category -- perhaps
very weak for that rating level if asset dispositions are completed at
prices materially lower than currently expected.
Offsetting these challenges and weaknesses is the strong support demonstrated
by the US Treasury and NY Fed. The Government has shown flexibility
in adjusting the amount and terms of its support with changing circumstances
at AIG and in the broader financial markets. The current ratings
on AIG and its subsidiaries reflect Moody's expectation of continuing
strong Government support, not only to fund immediate liquidity
needs but also to facilitate the global divestiture plan and the unwinding
of AIGFP. Without such support, the ratings of AIG and many
of its subsidiaries -- including core operations and businesses identified
for sale -- would be lower. Therefore, there is downward
rating transition risk for AIG in the future if and when the Government
support and related ownership interests are removed. At that time,
the rating would be dependent on the actual proceeds realized from asset
dispositions, AIG's resulting capital structure and the credit
profiles of businesses retained.
AIG, based in New York City, is an international insurance
and financial services organization, with operations in more than
130 countries and jurisdictions. The company is engaged through
subsidiaries in General Insurance, Life Insurance & Retirement
Services, Financial Services and Asset Management. AIG reported
a net loss of $24.5 billion for the third quarter of 2008.
As of September 30, 2008, shareholders' equity was $71.2
billion (including $23.0 billion of consideration received
for preferred stock not yet issued).
The last rating action took place on November 10, 2008, when
Moody's commented on AIG's third-quarter 2008 results
and its restructuring plan, while maintaining the ratings at the
current level (senior unsecured debt at A3/review down, short-term
debt at Prime-1/review down).
The principal methodologies used in rating this issuer were Moody's
Global Rating Methodology for Property and Casualty Insurers and Moody's
Global Rating Methodology for Life Insurers, which can be found
at www.moodys.com in the Credit Policy & Methodologies
directory, in the Rating Methodologies subdirectory. Other
methodologies and factors that may have been considered in the process
of rating this issuer can also be found in the Credit Policy & Methodologies
Moody's insurance financial strength ratings are opinions of the ability
of insurance companies to punctually pay senior policyholder claims and
obligations. For more information, please visit our website
VP - Senior Credit Officer
Financial Institutions Group
Moody's Investors Service
Financial Institutions Group
Moody's Investors Service
No Related Data.
© 2020 Moody's Corporation, Moody's Investors Service, Inc., Moody's Analytics, Inc. and/or their licensors and affiliates (collectively, "MOODY'S"). All rights reserved.
CREDIT RATINGS ISSUED BY MOODY'S INVESTORS SERVICE, INC. AND/OR ITS CREDIT RATINGS AFFILIATES ARE MOODY'S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MATERIALS, PRODUCTS, SERVICES AND INFORMATION PUBLISHED BY MOODY'S (COLLECTIVELY, "PUBLICATIONS") MAY INCLUDE SUCH CURRENT OPINIONS. MOODY'S INVESTORS SERVICE DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT OR IMPAIRMENT. SEE MOODY'S RATING SYMBOLS AND DEFINITIONS PUBLICATION FOR INFORMATION ON THE TYPES OF CONTRACTUAL FINANCIAL OBLIGATIONS ADDRESSED BY MOODY'S INVESTORS SERVICE CREDIT RATINGS. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS, NON-CREDIT ASSESSMENTS ("ASSESSMENTS"), AND OTHER OPINIONS INCLUDED IN MOODY'S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. MOODY'S PUBLICATIONS MAY ALSO INCLUDE QUANTITATIVE MODEL-BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS OR COMMENTARY PUBLISHED BY MOODY'S ANALYTICS, INC. AND/OR ITS AFFILIATES. MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DO NOT COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY'S ISSUES ITS CREDIT RATINGS, ASSESSMENTS AND OTHER OPINIONS AND PUBLISHES ITS PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL, WITH DUE CARE, MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.
MOODY'S CREDIT RATINGS,
ASSESSMENTS, OTHER OPINIONS, AND PUBLICATIONS ARE NOT INTENDED FOR USE BY RETAIL INVESTORS AND IT WOULD BE RECKLESS AND INAPPROPRIATE FOR RETAIL INVESTORS TO USE MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS OR PUBLICATIONS WHEN MAKING AN INVESTMENT DECISION. IF IN DOUBT YOU SHOULD CONTACT YOUR FINANCIAL OR OTHER PROFESSIONAL ADVISER.
ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT LIMITED TO, COPYRIGHT LAW, AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY'S PRIOR WRITTEN CONSENT.
MOODY'S CREDIT RATINGS,
ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS ARE NOT INTENDED FOR USE BY ANY PERSON AS A BENCHMARK AS THAT TERM IS DEFINED FOR REGULATORY PURPOSES AND MUST NOT BE USED IN ANY WAY THAT COULD RESULT IN THEM BEING CONSIDERED A BENCHMARK.
All information contained herein is obtained by MOODY'S from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors, however, all information contained herein is provided "AS IS" without warranty of any kind. MOODY'S adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources MOODY'S considers to be reliable including, when appropriate, independent third-party sources. However, MOODY'S is not an auditor and cannot in every instance independently verify or validate information received in the rating process or in preparing its Publications.
To the extent permitted by law, MOODY'S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability to any person or entity for any indirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with the information contained herein or the use of or inability to use any such information, even if MOODY'S or any of its directors, officers, employees, agents, representatives, licensors or suppliers is advised in advance of the possibility of such losses or damages, including but not limited to: (a) any loss of present or prospective profits or (b) any loss or damage arising where the relevant financial instrument is not the subject of a particular credit rating assigned by MOODY'S.
To the extent permitted by law, MOODY'S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability for any direct or compensatory losses or damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud, willful misconduct or any other type of liability that, for the avoidance of doubt, by law cannot be excluded) on the part of, or any contingency within or beyond the control of, MOODY'S or any of its directors, officers, employees, agents, representatives, licensors or suppliers, arising from or in connection with the information contained herein or the use of or inability to use any such information.
NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY CREDIT RATING, ASSESSMENT, OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY'S IN ANY FORM OR MANNER WHATSOEVER.
Moody's Investors Service, Inc., a wholly-owned credit rating agency subsidiary of Moody's Corporation ("MCO"), hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by Moody's Investors Service, Inc. have, prior to assignment of any credit rating, agreed to pay to Moody's Investors Service, Inc. for credit ratings opinions and services rendered by it fees ranging from $1,000 to approximately $2,700,000. MCO and Moody's investors Service also maintain policies and procedures to address the independence of Moody's Investors Service credit ratings and credit rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold credit ratings from Moody's Investors Service and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually at www.moodys.com
under the heading "Investor Relations — Corporate Governance — Director and Shareholder Affiliation Policy."
Additional terms for Australia only: Any publication into Australia of this document is pursuant to the Australian Financial Services License of MOODY'S affiliate, Moody's Investors Service Pty Limited ABN 61 003 399 657AFSL 336969 and/or Moody's Analytics Australia Pty Ltd ABN 94 105 136 972 AFSL 383569 (as applicable). This document is intended to be provided only to "wholesale clients" within the meaning of section 761G of the Corporations Act 2001. By continuing to access this document from within Australia, you represent to MOODY'S that you are, or are accessing the document as a representative of, a "wholesale client" and that neither you nor the entity you represent will directly or indirectly disseminate this document or its contents to "retail clients" within the meaning of section 761G of the Corporations Act 2001. MOODY'S credit rating is an opinion as to the creditworthiness of a debt obligation of the issuer, not on the equity securities of the issuer or any form of security that is available to retail investors.
Additional terms for Japan only: Moody's Japan K.K. ("MJKK") is a wholly-owned credit rating agency subsidiary of Moody's Group Japan G.K., which is wholly-owned by Moody's Overseas Holdings Inc., a wholly-owned subsidiary of MCO. Moody's SF Japan K.K. ("MSFJ") is a wholly-owned credit rating agency subsidiary of MJKK. MSFJ is not a Nationally Recognized Statistical Rating Organization ("NRSRO"). Therefore, credit ratings assigned by MSFJ are Non-NRSRO Credit Ratings. Non-NRSRO Credit Ratings are assigned by an entity that is not a NRSRO and, consequently, the rated obligation will not qualify for certain types of treatment under U.S. laws. MJKK and MSFJ are credit rating agencies registered with the Japan Financial Services Agency and their registration numbers are FSA Commissioner (Ratings) No. 2 and 3 respectively.
MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MJKK or MSFJ (as applicable) have, prior to assignment of any credit rating, agreed to pay to MJKK or MSFJ (as applicable) for credit ratings opinions and services rendered by it fees ranging from JPY125,000 to approximately JPY250,000,000.
MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements.