anon10

Is AIG a Buy Following the Government Bailout?

I agree with the author and bought a load of AIG this morning. It puzzled me why the stock was down 40%. I think there is some confusion of the Fed arrangement. Basically, AIG will use portions of the loan only if needed and will payoff the used loan portion in 2 years with asset sales sometime in the next 2 years. Meanwhile the stock has been knocked down to bankruptcy levels before the Fed arrangement was known. I think this weird Fed deal will be realized a major positive for the stock in the coming weeks as a 85Bln libor+8.5% loan by a unlevered lender for 2 years coming in at bankruptcy stock levels