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Standard & Poor’s Ratings Services announced that it has assigned its “AAA” preliminary senior debt rating, “AA+” preliminary subordinated debt rating, and “AA” preliminary preferred stock rating following American International Group Inc.’s (ÌìÃÀÍøÕ¾´«Ã½´«Ã½) $25.1 billion shelf registration of debt securities, preferred and common stock, depositary shares, and other securities.

“The size of the shelf registration is large and marks a shift in strategy to access the spread lending business through an alternative channel,” commented S&P credit analyst Grace Osborne. “ÌìÃÀÍøÕ¾´«Ã½´«Ã½ intends to use up to $20 billion of the registered securities for offering notes under new institutional and retail debt programs that will replace SunAmerica Life Insurance Co.’s current institutional funding agreement-backed notes program.”

S&P noted that ÌìÃÀÍøÕ¾´«Ã½´«Ã½ plans to issue the debts securities over the next two years “assuming market conditions are favorable.” It also indicated that “recent funding agreement-backed note issuances have averaged $8 billion-$10 billion over the past three years. The remaining expected issuances from the shelf registration will be used for general corporate purposes in the ordinary course of business.”

S&P said it “believes that it is both customary and prudent for a company of ÌìÃÀÍøÕ¾´«Ã½´«Ã½’s size and sophistication to build in flexibility to allow it to take advantage of financing opportunities in this manner. ÌìÃÀÍøÕ¾´«Ã½´«Ã½ has no current plans to issue equity, capital securities, or any of the other more complex securities included in the registration statement. Standard & Poor’s expects that the proceeds from any drawdown on the shelf registration will not result in increased financial leverage over the short term.”

Although it was not mentioned in S&P’s announcement, ÌìÃÀÍøÕ¾´«Ã½´«Ã½ also plans to establish a $10 billion euro ($13.2 billion) medium term note program (See IJ Website Dec. 8). The combined proceeds from the two debt issues exceeds $38 billion.

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