Moody's rates AIG notes Baa2

Moody's Investors Service said it assigned a Baa2 rating to $250 million of three-year subordinated notes being issued by American International Group, Inc.

The notes will become "covered debt" under the existing Replacement Capital Covenants (RCCs) associated with AIG's eight series of junior subordinated debentures.

The outlook is stable.

"The designation of the subordinated notes as covered debt under the existing RCCs, and the related amendments to those RCCs, will give AIG greater flexibility to redeem or refinance its hybrid securities," Moody's lead analyst for AIG Bruce Ballentine said in a news release. "Any ensuing reduction in AIG's debt burden and interest costs would be credit positive."

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