Duck and cover. Watch out for curveballs tomorrow.
We're seeing a lot of forced selling for liquidity. At some point it will abate, and we could see a spectacular turn in the markets. Whether it will stick is another matter altogether.
Stay frosty.
Rating agencies downgrade AIG, more cuts possible
Sep 15, 2008 10:29pm EDT
Reuters
HONG KONG, Sept 16 - The rating on embattled insurance giant American International Group Inc. was slashed by at least two notches by the three top global rating agencies, who also warned more downgrades could follow.
The triple strike jolted the insurer even as it is struggling to find funding sources at a time of global financial tumult which has brought two of the biggest Wall Street investment banks to their knees.
Moody's Investors Service cut AIG's rating to A2 from Aa3, a two-notch downgrade. Standard & Poor's Ratings Services lowered the rating to A-minus from AA-minus, a three-peg reduction and Fitch Ratings reduced its standing to A from AA-minus, a two notch cut.
AIG's ratings are still investment grade, although all three agencies said more downgrades could follow.
The announcements were made during Asia time on Tuesday, hours after New York state officials pieced together a $20 billion lifeline which would give the company temporary respite.
AIG's troubles, much like those of some of its Wall Street peers, stem from guarantees it wrote on mortgage-linked derivatives that have left it with a total of $18 billion in losses over the past three quarters.
In recent days, AIG has explored a wide range of options to shore up capital and avoid rating cuts.
JPMorgan and Goldman Sachs are exploring putting together a syndicated $70 billion to $75 billion credit facility for AIG, among other options.
This additional funding is critical for the insurer's survival in the longer term.
