Monday, February 23, 2009

Credit Coverage for AIG's IFLC is 35.7%

Anyone wanting credit "insurance" on AIG's aircraft leasing division debt will pay stratospheric rates. Reuters reported:

The cost to insure $10 million of ILFC debt for five years rose on Friday to $1.57 million up front, plus annual payments of $500,000, according to Markit Intraday. The up-front cost was $1.42 million on Thursday.

The cost to insure $10 million of AIG debt for five years rose to $685,000 annually from $610,000, Markit Intraday data shows.

The five year total for ILFC coverage is $3.57 million, or 35.7%. ILFC's credit default swaps are higher than the week of September 15, when George W. Bush pulled the emergency stop and saved AIG. History repeats, as AIG approaches the feds for another huge handout.

ILFC is up for sale and The Carlyle Group is one of the balls in the air. What will their purchase do to ILFC's cds rates? What kind of sweeteners will Treasury offer? Stay tuned...