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Investing

AIG Subprime Bonds Go On Sale (AIG, BCS, CS, GS, MS)

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By Paul Ausick Published
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Five big banks have been invited by the Federal Reserve Bank of New York to bid on a stack of subprime paper with an unpaid prinicipal balance of $6 billion that was issued by American International Group Inc. (NYSE: AIG) in its Maiden Lane II special purpose vehicle. The Wall Street Journal identifies the five banks as Barclays PLC (NYSE: BCS), Credit Suisse Group AG (NYSE: CS), Goldman Sachs Group Inc. (NYSE: GS), Morgan Stanley (NYSE: MS), and the Royal Bank of Scotland.

The securities had a fair value of about $0.49 on the dollar at the end of December, and the WSJ notes that subprime-backed securities were trading at $0.51 on the dollar yesterday.

The proceeds from the sale will be used to pay back a portion of the approximately $7 billion that AIG still owes the New York Fed on a $40 billion loan.

Photo of Paul Ausick
About the Author Paul Ausick →

Paul Ausick has been writing for a673b.bigscoots-temp.com for more than a decade. He has written extensively on investing in the energy, defense, and technology sectors. In a previous life, he wrote technical documentation and managed a marketing communications group in Silicon Valley.

He has a bachelor's degree in English from the University of Chicago and now lives in Montana, where he fishes for trout in the summer and stays inside during the winter.

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