AIG sets reference yields for $1.5 billion tender offers for notes

By Angela McDaniels

Tacoma, Wash., June 25 – American International Group, Inc. set the reference yields it will use to determine pricing for its tender offer for multiple series of junior subordinated debentures and its tender offer for multiple series of senior notes and debentures.

As previously reported, the company will spend up to $1.5 billion, excluding accrued interest, on the tender offers.

Pricing for the offers will be set following the offer expiration using fixed spreads over the yields to maturity of reference securities as of 2 p.m. ET on June 25 for dollar-denominated notes and 9 a.m. ET on June 25 for sterling- or euro-denominated notes.

Junior offer

Assuming a July 14 payment date, the purchase prices in the junior subordinated debentures offer are expected to be the following:

• £1,051.34 per £1,000 principal amount of AIG’s £244 million 5.75% series A-2 junior subordinated debentures based on the 1.211% yield of the 1.75% U.K. Treasury stock due Jan. 22, 2017 plus 250 basis points;

• €1,222.53 per €1,000 principal amount of AIG’s €127 million 8% series A-7 junior subordinated debentures based on the 0.099% yield of the 4% German Bunds due Jan. 4, 2018 plus 185 bps;

• £1,199.16 per £1,000 principal amount of AIG’s £138.2 million 8.625% series A-8 junior subordinated debentures based on the 1.603% yield of the 5% U.K. Treasury stock due March 7, 2018 plus 150 bps;

• $1,351.11 per $1,000 principal amount of AIG Life Holdings, Inc.’s $280.7 million 8.5% junior subordinated debentures due 2030 based on the 3.379% yield of the 3.625% U.S. Treasury bonds due Feb. 15, 2044 plus 185 bps;

• $1,130.26 per $1,000 principal amount of AIG’s $608.7 million 6.25% series A-1 junior subordinated debentures based on the 3.379% yield of the 3.625% U.S. Treasury bonds due Feb. 15, 2044 plus 188 bps;

• $1,393.48 per $1,000 principal amount of AIG’s $3,632,600,000 8.175% series A-6 junior subordinated debentures based on the 3.379% yield of the 3.625% U.S. Treasury bonds due Feb. 15, 2044 plus 188 bps;

• $1,334.00 per $1,000 principal amount of AIG Life’s $272.3 million 7.57% junior subordinated deferrable interest debentures, series A, based on the 3.379% yield of the 3.625% U.S. Treasury bonds due Feb. 15, 2044 plus 198 bps; and

• $1,409.38 per $1,000 principal amount of AIG Life’s $445 million 8.125% junior subordinated deferrable interest debentures, series B, based on the 3.379% yield of the 3.625% U.S. Treasury bonds due Feb. 15, 2044 plus 203 bps.

Senior offer

Also assuming a July 14 payment date, the purchase prices in the senior notes offer are expected to be the following:

• $1,306.00 per $1,000 principal amount of SunAmerica Inc.’s $100 million 8.125% debentures due April 28, 2023 based on the 2.566% yield of the 2.5% U.S. Treasury bonds due May 15, 2024 plus 140 bps;

• £1,142.21 per £1,000 principal amount of AIG’s £662.2 million 6.765% sterling notes due Nov. 15, 2017 based on the 1.211% yield of the 1.75% U.K. Treasury stock due Jan. 22, 2017 plus 110 bps;

• €1,192.87 per €1,000 principal amount of AIG’s €160.9 million 6.797% euro notes due Nov. 15, 2017 based on the 0.056% yield of the 0.5% German Bunds due April 7, 2017 plus 85 bps;

• $1,335.97 per $1,000 principal amount of AIG Life’s $150 million 7.5% notes due 2025 based on the 2.566% yield of the 2.5% U.S. Treasury bonds due May 15, 2024 plus 118 bps;

• $1,209.69 per $1,000 principal amount of AIG’s $1.5 billion 6.4% notes due 2020 based on the 1.657% yield of the 1.5% U.S. Treasury notes due May 31, 2019 plus 115 bps;

• $1,256.67 per $1,000 principal amount of AIG Life’s $150 million 6.625% notes due 2029 based on the 2.566% yield of the 2.5% U.S. Treasury bonds due May 15, 2024 plus 168 bps;

• $1,138.56 per $1,000 principal amount of AIG’s $2.5 billion 5.85% medium-term notes, series G, due Jan. 16, 2018 based on the 1.657% yield of the 1.5% U.S. Treasury notes due May 31, 2019 plus 10 bps;

• $1,363.54 per $1,000 principal amount of AIG’s $256.2 million 6.82% dollar notes due Nov. 15, 2037 based on the 3.379% yield of the 3.625% U.S. Treasury bonds due Feb. 15, 2044 plus 95 bps; and

• $1,099.07 per $1,000 principal amount of AIG’s $750 million 5.6% medium-term notes, series G, due Oct. 18, 2016 based on the 0.448% yield of the 0.375% U.S. Treasury notes due May 31, 2016 plus 70 bps. The senior notes are listed in order of priority acceptance level.

Each of the payments listed above includes a 5% early participation amount for notes tendered by the early tender deadline, 5 p.m. ET on June 25.

Holders will also receive accrued interest up to but excluding the payment date.

More offer terms

The offers will end at 11:59 p.m. ET on July 10.

The principal amount of junior debt securities AIG will purchase is limited to the amount AIG can purchase for (a) $1.0 billion plus (b) the difference between $500 million and the aggregate purchase price of the senior debt securities purchased if that purchase price is less than $500 million.

If the junior offer is oversubscribed, AIG will accept for payment all junior debt securities tendered on a prorated basis.

The principal amount of senior debt securities AIG will purchase is limited to the amount AIG can purchase for (a) $500 million plus (b) the difference between $1 billion and the aggregate purchase price of the junior debt securities AIG purchases if that purchase price is less than $1 billion.

If the senior offer is oversubscribed, AIG will accept for payment all senior debt securities tendered in accordance with their acceptance priority levels. If there are enough remaining funds to purchase some, but not all, of the remaining tendered senior debt securities of a series, AIG will accept for payment such tendered senior debt securities on a prorated basis.

The joint lead dealer managers are Citigroup Global Markets Inc. (800 558-3745 or 212 723-6106), Credit Suisse Securities (USA) LLC (800 820-1653 or 212 538-2147), J.P. Morgan Securities LLC (866 834-4666 or 212 834-4811), J.P. Morgan Securities plc (+44 20 7134 3414) and Wells Fargo Securities, LLC (866 309-6316 or 704 410-4760).

The co-dealer managers are ANZ Securities, Inc., Mizuho Securities USA Inc., Santander Investment Securities Inc., SMBC Nikko Securities America, Inc. and Standard Chartered Bank.

The junior co-dealer managers are ING Financial Markets LLC, Natixis Securities Americas LLC, PNC Capital Markets LLC, Samuel A. Ramirez & Co., Inc., Sandler O’Neill & Partners, LP and Williams Capital Group, LP.

The information agent and depositary is Global Bondholder Services Corp. (212 430-3774 for banks and brokers only, 866 470-3800 or +001 212 430-3774 international, by email at aig@gbsc-usa.com and online at gbsc-usa.com/aig).

The insurance company is based in New York City.

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