FINANCIAL INSTITUTIONSISSUER COMMENT 3 AUGUST 2015AMERICAN INTERNATIONAL GROUP (AIG)Moodys Senior Unsecured Rating Baa1Moodys Outlook STABond-Implied Rating Baa1CDS-Implied Rating A3EDF-Implied Rating A3As of 7/30/2015ANALYST CONTACTSAllerton G. Smith 212-553-4058 Sr Dir-Sr Research Analyst allerton.smith@moodys.comABOUT CAPITAL MARKETS RESEARCHAnalyses from Moodys Capital Markets Research, Inc. (CMR) focus on explaining signals from the credit and equity markets. The publications address whether market signals, in the opinion of the groups analysts, accurately reflect the risks and investment opportunities associated with issuers and sectors. CMR research thus complements the fundamentally-oriented research offered by Moodys Investors Service (MIS), the rating agency.CMR is part of Moodys Analytics, which is one of the two operating businesses of Moodys Corporation. Moodys Analytics (including CMR) is legally and organizationally separated from Moodys Investors Service and operates on an arms length basis from the ratings business. CMR does not provide investment advisory services or products.View the CMR FAQ Contact the CMR team Follow us on TwitterMoodys Analytics markets and distributes all Moodys Capital Markets Research, Inc. materials. Moodys Capital Markets Research, Inc. is a subsidiary of Moodys Corporation. Moodys Analytics does not provide investment advisory services or products. For further detail, please see the last page.This report has been republished on 1 July 2015 with the correction to Outlook in the ratings box from POS to STA.Market Signals ReviewAmerican International Group: Two Market-Implied Ratings Rise Over the last year, the CDS- and EDF'-implied ratings for AIG both improved. The bond-implied rating matches its level of one year ago. (Figure 1).FIGURE 1. AIG; MOODYS AND MARKET-IMPLIED RATINGS, 5 YEARS (DAILY OBSERVATIONS)AIGs CDS-implied rating progressed from its low point of B1 in November of 2011 to the current level of A3. It reached parity with the Moodys senior debt rating of Baa1 in March of 2013 for the first time since November of 2006 (when the Moodys rating was Aa2). The CDS-implied rating retreated from Baa1 for a few months following mid-March 2013, but returned to the Baa1 level again on October 17, 2013. It remained between A3 and Baa1 on a daily basis ever since, with the exception of a very brief dip to Baa2 in late April of this year.MOODY'S ANALYTICS FINANCIAL INSTITUTIONS2 3 AUGUST 2015 MARKET SIGNALS REVIEW : AMERICAN INTERNATIONAL GROUP: TWO MARKET-IMPLIED RATINGS RISEThe sale of ILFC by AIG (which had been expected for some time) was announced in mid-December 2014 and is a credit positive event for AIG. The sale, in our view, has helped to sustain the higher CDS-implied rating level.The bond-implied rating for AIG declined to its lowest level ever of Ba3 in December 2011. From there, it rose steadily until it matched the Moodys senior r...
