January 26, 2016 / 9:03 PM / 2 years ago

Fitch Solutions: AIG CDS at Widest Level in Two Years

(The following statement was released by the rating agency) NEW YORK, January 26 (Fitch) Rising shareholder pressure is inching credit default swap (CDS) spreads for American International Group (AIG) to levels not seen since 2014, according to Fitch Solutions in its latest CDS case study snapshot. Five-year CDS on AIG have edged out 55% since the start of the year. CDS on AIG underperformed the broader North America financials industry (spreads 20% wider since the start of the year). 'The market is pricing in increased credit default risk for AIG amid pressure from shareholders to break the company up,' said Director Diana Allmendinger. AIG's investor presentation today reiterated that the company plans to maintain its multi-line insurance profile as a breakup would reduce diversification benefits from a capital adequacy perspective and the ability to fully utilize existing deferred tax assets. Whether greater certainty of AIG's strategic intentions will result in a narrowing of CDS spreads to prior levels will bear further watching. Fitch Solutions case studies build on data from its CDS Pricing Service and proprietary quantitative models, including CDS Implied Ratings. These credit risk indicators are designed to provide real-time, market-based views of creditworthiness. As such, they can and often do reflect more short term market views on factors such as currencies, seasonal market effects and short-term technical influences. This is in contrast to Fitch Ratings' Issuer Default Ratings (IDRs), which are based on forward-looking fundamental credit analysis over an extended period of time. Contact: Diana Allmendinger Director +1 212-908-0848 Fitch Solutions, 33 Whitehall Street, New York, NY 10004 Media Relations: Sandro Scenga, New York, Tel: +1 212-908-0278, Email: sandro.scenga@fitchratings.com. Fitch Group is a global leader in financial information services with operations in more than 30 countries. Fitch Group is comprised of: Fitch Ratings, a global leader in credit ratings and research; Fitch Solutions, a leading provider of credit market data, analytical tools and risk services; BMI Research, an independent provider of country risk and industry analysis specializing in emerging and frontier markets; and Fitch Learning, a preeminent training and professional development firm. With dual headquarters in London and New York, Fitch Group is majority owned by Hearst.

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