AIG to borrow $20.9 billion more from Fed
Money from the commercial-paper offering will meet the company’s working-capital needs and go toward payments on the $85 billion lending facility from the Fed.
American International Group Inc. has joined the New York Federal Reserve Bank’s commercial-paper program, making it eligible borrow another $20.9 billion.
Four of New York-based AIG’s business units said that they will participate in the Fed’s Commercial Paper Funding Facility: AIG Funding Inc. in New York and International Lease Finance Corp. in Los Angeles, plus two investment vehicles, Curzon Funding LLC and Nightingale Finance LLC, may issue up to $6.9 billion, $5.7 billion, $7.2 billion and $1.1 billion, respectively, of commercial paper under the program, according to a filing with the Securities and Exchange Commission.
The latter two are AIG investment vehicles.
Money from the commercial-paper offering will meet the company’s working-capital needs and go toward payments on the $85 billion lending facility from the Fed.
The amount of money borrowed from that credit line, plus the $37.8 billion securities lending facility, has actually occurred in the last week: Total borrowing hit $90.3 billion last Thursday but had fallen to $83.5 billion by Wednesday.
The carrier’s prepayments on the initial $85 billion facility have been voluntary and thus allow AIG to go back and borrow what it had paid back if necessary.
This wouldn’t be possible if the prepayment came from the sale of assets, which would cut the amount of money the insurer could borrow from the facility, according to the terms of AIG’s agreement with the Federal Reserve.
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