S&P: AIG on developing watch

Standard & Poor's said it revised the CreditWatch status of the A- long-term counterparty credit rating on American International Group Inc. to CreditWatch developing from CreditWatch negative.

The agency raised short-term counterparty ratings on AIG to A-1 from A-2 and lowered various subsidiaries' preferred shares to B from BBB. Ratings on the preferred shares remain on CreditWatch negative, S&P said, because of the increased risk of deferral of dividend payments due to the right of U.S. government to veto dividend payments.

The BBB/A-3 counterparty credit rating on American General Finance Corp. remains unchanged.

The outlook is negative.

S&P noted that the Federal Reserve Bank of New York extended an $85 billion 24-month borrowing facility for AIG, intended to assist the company in meeting its financial obligations during that term.

The agency said the Fed's actions will provide AIG with substantial relief from its near-term liquidity constraints.

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