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Bailed-out insurer American International Group (AIG) returned to the debt market Tuesday after more than a two-year absence, part of its strategy to raise capital as it works on various deals to pay back the government.
AIG had said earlier this month it wanted to sell debt in the fourth quarter and stock in the first quarter of 2011, with Chief Executive Robert Benmosche calling a total capital raise of $3.5 billion a “modest goal.”
AIG has yet to offer guidance on the January 2014 and December 2020 senior unsecured notes, though market whispers have the 2014s pricing at Treasuries plus the low-300 basis point range, and the 2020s at Treasuries plus the high-300s range.
It is the first debt sale for the company since August 2008, when it sold more than $3 billion in 10-year paper. Those bonds are currently being quoted at 300 basis points over 10-year Treasury bonds.
AIG said in a filing with securities regulators it would use the proceeds of the new offering for general corporate purposes, with the consent of the Federal Reserve Bank of New York.
The company is in the midst of a recapitalization deal, expected to close in the first quarter, that will pay off the New York Fed and leave the Treasury Department with a 92.1 percent stake in AIG.
Even after that deal, AIG will still owe about $100 billion to the government from a bailout that at one point peaked at just more than $182 billion.
(Reporting by Ben Berkowitz, additional reporting by IFR analyst Andrea Johnson, editing by Dave Zimmerman)