S&P puts AIG on watch

Standard & Poor's said it revised the CreditWatch status of its ratings on American International Group Inc. and AIG's guaranteed subsidiaries to negative from developing.

The ratings on most of AIG's insurance operating subsidiaries remain on CreditWatch with developing implications.

The A-/A-1 counterparty credit rating on AIG relies on the significant support from the $85 billion borrowing facility provided by the Federal Reserve Bank of New York. The agency said the $61 billion draw to date on the facility is much larger than S&P previously anticipated and has caused the scope of the planned business sales to exceed the agency's expectations.

The ratings on AIG are on CreditWatch negative because of S&P's view of the risks around the execution of the plan as well as the heavy debt-service requirements of a much smaller and less-diversified AIG, the agency said, adding that the current disruption in the credit markets could make it difficult to sell businesses at attractive valuations.

Over the longer term, S&P expects that the effects of the disposition, coupled with broader market-support actions, will improve the available funds under the Fed borrowing facility.

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