The rating agency said it saw risks of payment deferral on AIG’s hybrid securities and downgraded the junior subordinated and preferred securities by five notches to “BB”.
“The possibility of increased future political or other incentives to defer payments on hybrid instruments in order to preserve cash to support repayment of taxpayer funded capital is a concern for AIG’s deferrable hybrid securities,” Fitch said in a release.
Standard & Poor’s affirmed its “A-” counterparty credit rating on AIG and removed the ratings off watch negative. It has a negative outlook on the company.
Moody’s also cut AIG’s subordinated debt ratings by four notches to “Ba2”, but affirmed its “A3” rating on the group’s senior unsecured debt. Its rating outlook for AIG is negative.
“The rating confirmation for AIG and its core property and casualty operations reflects the benefits to policyholders and senior creditors from the restructuring steps announced today,” said Bruce Ballentine, Moody’s lead analyst for AIG.
Moody’s expects the government would provide “incremental support as needed to ensure that AIG can meet its obligations through this period of severe economic recession and market turmoil,” Ballentine said.
Source : Reuters