A wholly owned subsidiary of
American International Group
), the International Lease Finance Corporation (ILFC) recently
declared that it would issue and sell $550 million of floating
rate senior notes with maturity scheduled in 2016. The notes
carry an interest rate of 1.95%.
ASSURED GUARNTY (AGO): Free Stock Analysis
AMER INTL GRP (AIG): Free Stock Analysis
EASTERN INSURNC (EIHI): Free Stock Analysis
PRUDENTIAL FINL (PRU): Free Stock Analysis
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The issuance will be in accordance with a registration statement
filed with the Securities and Exchange Commission in Jul 23,
2012. ILFC is expected to close the transaction on May 24, 2013,
subject to customary closing conditions.
As of Mar 31, 2013, the debt-to-capital ratio of American
International Group was 0.31x which represented an improvement of
2 percentage points over 0.33x at 2012 end. However, the current
issuance of $550 million will have no material impact on the
The company also scores strongly with the credit rating agencies.
As of Apr 2013, Moody's Corp and Fitch Ratings assigned credit
ratings of "Baa1" and "BBB", both carrying a stable outlook while
Standard & Poor provided a credit rating of "A-" with a
negative outlook. The higher ratings came on the back of strong
financial position of the company.
Interest expense of American International Group increased 2.1%
year over year to $577 million in the first quarter of 2013. We
expect the new issuance to increase its interest expense further.
However, the balance sheet of the company as of Mar 31, 2013
seemed strong enough owing to the maturity, repayment and
purchase of debt worth $2.9 billion. Towards this end, in Mar,
2013, American International Group redeemed 7.7% Series A-5
junior subordinated debentures worth $1.1 billion with maturity
scheduled in 2047.
Earlier this month, another insurer,
Prudential Financial Inc.
) declared that on Jun 15, 2013, it will redeem all of its
outstanding 9% junior subordinated notes worth $920 million,
which are scheduled to mature in 2068.
American International Group currently carries a Zacks Rank #2
(Buy). Among other industry majors,
Eastern Insurance Holdings Limited
Assured Guaranty Limited
) carry a favorable Zacks Rank #1 (Strong Buy) and are worth