8:02 AM
AIG pays back $4 billion of U.S. loan
Addison Ray
NEW YORK | Mon Aug 23, 2010 10:09am EDT
NEW YORK Reuters - Bailed-out insurer American International Group Inc AIG.N said on Monday it paid back nearly $4 billion in U.S. loans in its single largest cash payment so far to reduce its debt to taxpayers.
The payment reduces the size of the Federal Reserve Bank of New Yorks credit facility by that amount to about $30 billion. The outstanding principal balance, excluding fees and interest, is now at just over $15 billion.
At $15 billion, the balance is at its lowest level since the March 2009 restructuring of government aid, a source told Reuters previously. A previous low of $17 billion was reached in December after AIG gave the Fed preferred interest in two special purpose vehicles created to hold its foreign life insurance business.
AIG, which is nearly 80 percent owned by the U.S. government, was rescued in September 2008. Besides the Fed credit facility, the U.S. Treasury Department holds about $49 billion in preferred shares that AIG must repay.
The Fed repayment comes after International Lease Finance Corp, AIGs aircraft leasing unit, sold $4.4 billion in debt to investors and used the bulk of the proceeds to repay $3.9 billion in government loans.
AIGs shares rose 1.2 percent to $35.60 during morning trading on the New York Stock Exchange.
Reporting by Paritosh Bansal, editing by Gerald E. McCormick
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