AIG MAY ASK FEDERAL RESERVE TO RELAX ASSET SALE RESTRICTIONS

Troubled New York-based insurer AIG is planning to ask the US Federal Reserve to relax rules on the sales of AIG’s assets, according to a Financial Times report. AIG is currently required to ask that 90% of the sale price of any AIG assets be paid in cash up front. AIG is thought to be looking to ask for permission to take a higher proportion of bids in the form of paper, and/or to accept cash payments in instalments. The moves were said to be aimed at reducing the perception that AIG was conducting a firesale. Meanwhile, Maiden Lane III, one of the financing entities set up by the Federal Reserve Bank of New York and AIG to relieve financial pressure on the insurer, has bought another $16bn of multi-sector collateralized debt obligations that were guaranteed by the company. With the purchases, credit default swaps written by AIG Financial Products have been terminated. The latest deal brings Maiden Lane III’s purchases of AIG-guaranteed CDOs to $62.1bn. The purchase was funded by a net payment of $6.7m to counterparties and AIG Financial Products’ surrender of around $9.2bn in collateral that the AIG unit had previously posted to counterparties.