* Government has incentive to continue support - Moody's
* Go-slow restructuring preserves value - Moody's
* AIG shares up 3.7 pct
(Adds stock and CDS price moves)
NEW YORK, Nov 10 Insurance giant AIG has made
progress on its restructuring and will likely be able to repay
a taxpayer bailout and buy back much of the government's stake
in the company, Moody's Investors Service said on Monday.
The Moody's statement was a rare expression of optimism for
American International Group Inc (AIG.N), which has received up
to $180 billion of federal aid and is now 80 percent owned by
Moody's said AIG's restructuring plan still relies heavily
on government support, but if its operations and global
financial markets continue to stabilize, the company likely can
generate enough value to repay the government.
The vote of confidence sent AIG's hard-hit shares up 3.7
percent to $37.52. The cost of insuring $10 million of AIG debt
for five year fell to around $732,000 annually, down $10,000
from Monday, according to Markit Intraday.
AIG posted its second straight quarterly profit last week,
helped by a recovery in the value of its investments. But its
underlying business remained weak. For details click on
The quarterly results "show continued stabilization of the
core insurance operations despite challenging market
conditions," Moody's said.
With the government likely to recoup its investment, it has
incentive to continue supporting AIG and its various creditors,
Moody's said. The agency affirmed AIG's long-term credit rating
of A3, the seventh-highest investment grade, with a "negative"
Credit spreads on AIG's 8.25 percent notes due in 2018
tightened by 0.15 percentage point on Tuesday, to 7.51 points
over U.S. Treasuries, according to MarketAxess.
AIG's $180 billion of federal aid includes more than $80
billion in loans. The company has sought to sell major business
units to help repay the government, but has struggled to find
buyers willing to pay enough.
Since the appointment of former MetLife Chief Executive
Robert Benmosche as AIG CEO in August, the company has focused
on rebuilding the value of some businesses previously slated
for sale, Moody's said.
"We believe that the slower approach to restructuring could
help AIG to generate more favorable values from its business
portfolio than would be the case under rushed asset sales," it
(Reporting by Dena Aubin; Additional reporting by Joe Giannone
and Karen Brettell; editing by Walker Simon and John Wallace)