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According to Moody’s Investors Service, AIG may actually be able to pay back its loans from the government. The company posted its second straight quarterly profit last week thanks to a recovery in the value of investments.

Moody’s said that as long as the operations of AIG and other markets continue to get better and stabilize, then they will likely be able to repay the government with heavy government support in its restructuring plan.

With the government now likely to recoup its investment, it has incentive to continue supporting AIG and its various creditors, Moody’s said. The agency affirmed AIG’s long-term rating of A3, the seventh-highest investment grade, with a negative outlook.

Credit spreads on AIG’s 8.25 percent notes due in 2018 tightened by 15 basis points on Tuesday to 751 basis points over U.S. Treasuries, according to MarketAxess.

Over the past year, AIG has taken more than $180 billion in financial aid from the government. Eighty percent is currently owned by taxpayers in the United States. While AIG is looking for someone to buy major assets, it is having a very difficult time finding anyone to buy from them.

I am actually surprised to see any company saying that AIG will be able to pay back the better part of $200 billion to anyone…especially from a company that went nearly bankrupt.

I don’t see why anyone would spend their time investing in a company like this. I sometimes wonder if the government knew what they were getting themselves into with AIG if they would have lent the money to them without and major consequences (remember executive retreats and those outrageous bonuses?).

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Jeremy

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