UpInArms
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Fri May-23-08 12:15 PM
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52. Moody's cuts AIG rating; shares fall - outlook now "negative" |
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http://www.reuters.com/article/bondsNews/idUSN2320919320080523?sp=trueNEW YORK, May 23 (Reuters) - Moody's Investors Service has cut its rating of American International Group Inc (AIG.N: Quote, Profile, Research) debt, citing losses from the world's largest insurer's exposure to the U.S. mortgage market and credit derivatives.
AIG shares fell 2.5 percent and were the top drag on the market's leading indicators, the Dow Jones industrial average .DJI and Standard & Poor's 500 .SPX.
Moody's lowered AIG's rating to "Aa3" from "Aa2" and said the outlook was "negative."
The ratings agency had placed AIG under review for a possible downgrade earlier this month, after the insurer reported a first-quarter net loss of $7.8 billion. This was the second consecutive quarter of record losses for AIG.
The downgrade, which came hours after AIG said it had raised $20 billion with a sale of equity, debt and convertible securities, places the company three notches below the top credit rating.
"Today's one-notch downgrade reflects AIG's sizable mortgage-related losses and write-downs to date," Moody's said, citing market losses of $13 billion on credit default swaps and realized losses of more than $5 billion on residential mortgage-backed securities.
These losses, posted in the past two quarters, were in addition to a $9 billion write-down of investments, mostly related to RMBS.
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