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For Immediate Release

Chicago, IL – March 22, 2012 – announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include American International Group Inc. (AIG - Free Report) , Moody’s Corp. (MCO - Free Report) , JP Morgan (JPM - Free Report) , Wells Fargo & Co. (WFC - Free Report) and MetLife Inc. (MET - Free Report) .

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Here are highlights from Wednesday’s Analyst Blog:

AIG Raises $2B from Notes

On Monday, American International Group Inc. (AIG - Free Report) issued long-term notes worth $2 billion in a two-part offering, according to Thomson Reuters.

Accordingly, one fraction of senior unsecured notes is valued at $1.25 billion. These notes were issued at a price of $99.797 and dated to mature on March 20, 2017.  These callable five-year fixed rate notes are projected to have a spread of 265 basis points (bps) over the US Treasuries, while bearing a coupon rate of 3.8% and yield rate of 3.845%.

Besides, the second tranche of senior unsecured notes is worth $750 million. These notes were issued at a price of $99.844 and dated to mature on March 20, 2015.  These three-year fixed rate notes are projected to have a spread of 245 bps over the US Treasuries, bearing a coupon rate of 3.0% and yield rate of 3.055%. Besides, interest on the all of the $2 billion notes will be payable semi-annually, in equal installments, commencing on September 20, 2012.

Both the set of unsecured notes carry a rating of “Baa1”, “A-” and “B” from Moody’s Investor Service of Moody’s Corp. (MCO - Free Report) , Standards & Poor’s (S&P) and Fitch, respectively. Further, AIG appointed JP Morgan (JPM - Free Report) , Wells Fargo & Co. (WFC - Free Report) , and others as its joint book-running managers for the sale.

The Road to Recovery…

AIG intends to utilize the proceeds from the sale of notes to repay $1.5 billion, which the company owed to the government through preferred equity investment special purpose vehicles (SPV) as part of the bailout. This SPV is related to the holding was a stake in AIG’s Asian wing – AIA Group Limited (AIA).

The US government had preferred interests in two special purpose vehicles (SPVs), one of which was against the sale of ALICO to MetLife Inc. (MET - Free Report) and has been paid off. Moreover, AIG plans to squeeze out another $1.6 billion from the escrowed cash proceeds from the sale of its American Life Insurance Co. (ALICO) subsidiary to MetLife in 2010.

The cash proceeds from the ALICO sale is expected to be released in two parts. While the first tranche of approximately $1.0 billion, subject to certain reserve amounts, will be paid by November 2012, the remaining amount is slated to be paid by May 2013.

Going forward, the lucrative sale of Maiden II raises optimism for a profitable sale of other investment vehicle – Maiden Lane III, which contains collateralized debt obligations (CDOs) that were held by AIG’s counterparties, and were bought by the Federal Reserve to terminate credit default swaps (CDS) issued by the company. Meanwhile, AIG also expects to vend its stake in several privately held companies and use the net proceeds to repay the government bailout loan as soon as possible.

Further, divestiture of over $50 billion of assets is also considered crucial for gaining capital flexibility and focusing on its core life and property-casualty business. With net operating earnings of $20 billion in the fourth quarter of 2011, AIG has been showcasing an impressive rebound, particularly in its core operations – Chartis and SunAmerica. The company’s credibility is also validated by its debt and financial leverage of 13% and 20%, respectively, at the end of 2011. Meanwhile, the repayment of a chunk of its $182.3 billion loan, which was doled out by the US government at the peak of the financial turmoil in 2008, has helped in reducing the Treasury stake in AIG to 70% from 77%, earlier this month.

Although AIG had a low fixed charge coverage ratio of 3.0x at 2011-end, the S&P Ratings justify it by pointing out the severe catastrophe losses incurred by Chartis in 2011, which should certainly improve this year. This again infuses ample confidence in AIG’s core fundamental growth going ahead.

Overall, we believe that AIG is poised to accentuate its operating and capital leverage upon dilution of the government stake. However, the risk of execution continues to chase AIG considering the increasing competitive pressure and market volatility. Alongside, several non-recurring charges, associated with the intense restructuring, are also expected to mar the desired upside in the upcoming quarters. This is also reflected by the Zacks Rank #3 for AIG, which translates into a short-term Hold rating and long-term Neutral stance.

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