AIG credit rating downgraded to As3

by Gill Montia

Story link: AIG credit rating downgraded to As3

Credit rating agency, Moody’s, has downgraded the senior unsecured debt rating of American International Group (AIG), to Aa3 from Aa2.

Downgrades have also been applied to a number of the group’s subsidiaries, particularly businesses that rely on the financial support of their parent company and those exposed to the residential mortgage market in the US.

In the first quarter of 2008, the group posted a $7.81 billion net loss, after writing down $13.1 billion in relation to sub-prime and other investment losses.

This week, AIG surprised the markets by announcing that it was in the process of raising $20 billion through the sale of equity and debt issues.

The fund raising is 60% larger than initially planned and according to Moody’s, will help AIG to absorb economic losses that may develop over time.