I have followed on this for over a year, now finally Fed sold the last piece of ML III securities. This is a big landmark on Fed’s bail-out of AIG.With this sale, Fed profits $6.6 billion. From the obligation satisfied and a $5 bil equity contribution from AIG repaid, AIG is entitled to 1/3 of the proceeds of this latest sale, so that is about $2 B.
Here is the news and its abstract,
http://www.foxbusiness.com/news/2012/08/23/ny-fed-ends-aig-maiden-lane-chapter-with-66-billion-profit/
“The Federal Reserve Bank of New York on Thursday profitably closed the book on its crisis-era seizure of American International Group Inc.’s (AIG) most toxic assets, selling the last of the complex securities that have evolved from being Exhibit A of the financial crisis into one of the hottest buys around.
The New York Fed announced a profit of about $6.6 billion from selling the second of two portfolios of mortgage-related assets taken on during the controversial 2008 bailout of AIG. Gains from the portfolio, known as Maiden Lane III, added to the $2.85 billion in gains registered earlier this year after the New York Fed exhausted sales of similar, but less complex, bonds from another AIG-related vehicle.
The New York Fed since April has been selling off about $47 billion in face value of complex mortgage assets from Maiden Lane III, which in late 2008 paid about 47 cents on the dollar to acquire securities insured by a unit of AIG. Proceeds from earlier auctions resulted in the full paydown of a $24 billion loan the New York Fed provided to purchase the assets in the portfolio. With that obligation satisfied and a $5 billion equity contribution from AIG repaid, the insurer is entitled to one-third of the proceeds from the latest sale.
The net gain of about $6.6 billion includes $737 million of accrued interest from the New York Fed’s loan to Maiden Lane III, the regional Federal Reserve bank said in a statement.
AIG can put the proceeds toward repurchases of its shares from the U.S. Treasury Department, which still owns a 53% stake in the company as a result of its participation in AIG’s $182.3 billion bailout. AIG has spent $8 billion buying back stock from Treasury this year and said it hopes to use funds raised from the Maiden Lane III sale and other asset dispositions to further reduce the government’s stake.”
Same news on CNBC video
In addition to this $2B, AIG is probably going to sell its all its remaining 18.6% AIA shares in early Sept. AIG will pocket ~$7.6 B from this proceeding.
News is here
http://www.reuters.com/article/2012/05/16/us-aig-aia-idUSBRE84F0TV20120516
“Bailed-out insurer American International Group Inc (AIG.N) will sell its shares in Asian insurer AIA Group Ltd (1299.HK) after a lock-up period expires in early September, Chief Executive Bob Benmosche said on Wednesday.
Benmosche said the shares “will be liquidated after September 4,” according to a transcript of AIG’s annual shareholder meeting on its website. He said the sale would help decrease volatility in AIG’s earnings.
AIG spun off two-thirds of AIA in 2010 as part of a package of asset sales to repay its $182 billion U.S. government rescue. Fluctuations in AIA’s share price have caused large swings in AIG’s earnings since then, with quarterly gains or losses of more than $1 billion commonplace.
AIG sold part of the stake in March, raising around $6 billion and leaving it with 18.6 percent of AIA, one of Asia’s three largest insurers.
Since that sale, which included the lock-up provision, AIA shares have fallen 2.8 percent. At current levels the remaining stake is worth $7.6 billion.”
Benmosche said the shares “will be liquidated after Sept. 4,” according to a transcript of AIG’s annual shareholder meeting on its website. He said the sale would help decrease volatility in AIG’s earnings.”
So now AIG will have ~$10B cash in hand in early Sept. They can use this big chunk of money to massively buy back a big portion of the AIG shares from Treasury. So far, Treasury still holds ~$24 Bil of AIG common shares (~53% of total AIG outstanding shares). If Fed sells another $10B to AIG (assuming AIG will be the only buys for Treasury’s sale) in Sept, then Fed’s hold of AIg will be reduced to ~31% (given the current AIG stock price). So this will be the first time since 2008~2009 crisis, Fed’s waterline in AIG shares will drop down way lower than 50%, that is very remarkable!!
The impact on the stock price and psychological effects of investors might be hugely positive! We might see a few institutional investors will also jump into the boat…
We will see.
About Timeless Investor
My name is Samual Lau. I am a long-term value investor and a zealous disciple of Ben Graham. And I am a MBA graduated in May 2010 from Carnegie Mellon University. My concentrations are Finance, Strategy and Marketing.
TimelessInvestor
AIG ends Fed Maiden Lane chapter
I have followed on this for over a year, now finally Fed sold the last piece of ML III securities. This is a big landmark on Fed’s bail-out of AIG.With this sale, Fed profits $6.6 billion. From the obligation satisfied and a $5 bil equity contribution from AIG repaid, AIG is entitled to 1/3 of the proceeds of this latest sale, so that is about $2 B.
Here is the news and its abstract,
http://www.foxbusiness.com/news/2012/08/23/ny-fed-ends-aig-maiden-lane-chapter-with-66-billion-profit/
“The Federal Reserve Bank of New York on Thursday profitably closed the book on its crisis-era seizure of American International Group Inc.’s (AIG) most toxic assets, selling the last of the complex securities that have evolved from being Exhibit A of the financial crisis into one of the hottest buys around.
The New York Fed announced a profit of about $6.6 billion from selling the second of two portfolios of mortgage-related assets taken on during the controversial 2008 bailout of AIG. Gains from the portfolio, known as Maiden Lane III, added to the $2.85 billion in gains registered earlier this year after the New York Fed exhausted sales of similar, but less complex, bonds from another AIG-related vehicle.
The New York Fed since April has been selling off about $47 billion in face value of complex mortgage assets from Maiden Lane III, which in late 2008 paid about 47 cents on the dollar to acquire securities insured by a unit of AIG. Proceeds from earlier auctions resulted in the full paydown of a $24 billion loan the New York Fed provided to purchase the assets in the portfolio. With that obligation satisfied and a $5 billion equity contribution from AIG repaid, the insurer is entitled to one-third of the proceeds from the latest sale.
The net gain of about $6.6 billion includes $737 million of accrued interest from the New York Fed’s loan to Maiden Lane III, the regional Federal Reserve bank said in a statement.
AIG can put the proceeds toward repurchases of its shares from the U.S. Treasury Department, which still owns a 53% stake in the company as a result of its participation in AIG’s $182.3 billion bailout. AIG has spent $8 billion buying back stock from Treasury this year and said it hopes to use funds raised from the Maiden Lane III sale and other asset dispositions to further reduce the government’s stake.”
Same news on CNBC video
In addition to this $2B, AIG is probably going to sell its all its remaining 18.6% AIA shares in early Sept. AIG will pocket ~$7.6 B from this proceeding.
News is here
http://www.reuters.com/article/2012/05/16/us-aig-aia-idUSBRE84F0TV20120516
“Bailed-out insurer American International Group Inc (AIG.N) will sell its shares in Asian insurer AIA Group Ltd (1299.HK) after a lock-up period expires in early September, Chief Executive Bob Benmosche said on Wednesday.
Benmosche said the shares “will be liquidated after September 4,” according to a transcript of AIG’s annual shareholder meeting on its website. He said the sale would help decrease volatility in AIG’s earnings.
AIG spun off two-thirds of AIA in 2010 as part of a package of asset sales to repay its $182 billion U.S. government rescue. Fluctuations in AIA’s share price have caused large swings in AIG’s earnings since then, with quarterly gains or losses of more than $1 billion commonplace.
AIG sold part of the stake in March, raising around $6 billion and leaving it with 18.6 percent of AIA, one of Asia’s three largest insurers.
Since that sale, which included the lock-up provision, AIA shares have fallen 2.8 percent. At current levels the remaining stake is worth $7.6 billion.”
Benmosche said the shares “will be liquidated after Sept. 4,” according to a transcript of AIG’s annual shareholder meeting on its website. He said the sale would help decrease volatility in AIG’s earnings.”
So now AIG will have ~$10B cash in hand in early Sept. They can use this big chunk of money to massively buy back a big portion of the AIG shares from Treasury. So far, Treasury still holds ~$24 Bil of AIG common shares (~53% of total AIG outstanding shares). If Fed sells another $10B to AIG (assuming AIG will be the only buys for Treasury’s sale) in Sept, then Fed’s hold of AIg will be reduced to ~31% (given the current AIG stock price). So this will be the first time since 2008~2009 crisis, Fed’s waterline in AIG shares will drop down way lower than 50%, that is very remarkable!!
The impact on the stock price and psychological effects of investors might be hugely positive! We might see a few institutional investors will also jump into the boat…
We will see.
About Timeless Investor
My name is Samual Lau. I am a long-term value investor and a zealous disciple of Ben Graham. And I am a MBA graduated in May 2010 from Carnegie Mellon University. My concentrations are Finance, Strategy and Marketing.