This page has been archived and commenting is disabled.

AIG Offering To Price At $29/Share

Tyler Durden's picture




 

According to Dow Jones and now CNBC's Kate Kelly, the AIG offering is due to price at $29 as underwriters supposedly have succeeded in the last minute scramble to get enough bid interest above the Treasury's breakeven price of $28.70. That's a $0.30 buffer. Surely this will inspire much confidence in the deep order book of institutions which despite having access to limitless zero cost cash, still barely chipped in enough to avoid major 11th hour embarrassment for Tim Geithner. In the meantime here is the math for determining just how taxpayers are winning on this deal: Treasury gets $5.8 billion in cash proceeds (200MMx $29), which is immediately offset by $35 billion in debt issued today, another $35 billion tomorrow, and $29 billion on Thursday. One step forward. Fifteen steps back.

 

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Tue, 05/24/2011 - 17:30 | 1306788 Cleanclog
Cleanclog's picture

What poor pathetics "must" buy? Geitner twist or secret new Dodd-Frank rules still hammering out in the backrooms?

Tue, 05/24/2011 - 18:58 | 1307060 Anonymouse
Anonymouse's picture

You are right on that.  I've only seen the ragged edge of banker arm-twisting, begging, and offers of quid pro quo, but it seems to be quite common, so they can fill their book. Of course, when it comes time to get quo, they seem to have no quid.

I pity those that subscribe to this IPO.  With that level of depth, it will drop like a rock when free to trade.

Tue, 05/24/2011 - 17:31 | 1306793 Chippewa Partners
Chippewa Partners's picture

The 30 cent buffer is a yawn.   It's a sham and a shame. 

Tue, 05/24/2011 - 19:01 | 1307070 Ergo
Ergo's picture

I presume some heavy hitters are researching shorts right now.  Surely the landscape has changed a lot.  If it's really such an obvious short, I presume buyers are getting rewards elsewhere.  Welcome to central planning.

Wed, 05/25/2011 - 01:17 | 1307988 I am a Man I am...
I am a Man I am Forty's picture

uh aig down more than 50 percent in 4 months

Tue, 05/24/2011 - 19:03 | 1307084 Anonymouse
Anonymouse's picture

But what a homerun for the taxpayer WHO MADE A PROFIT ON THE TRANSACTION!!!

A profit of $0.30, or 1.045%

Or on an annualized basis 0.389%

And all we had to do was take distressed debt risk.

What's not to love?

Tue, 05/24/2011 - 20:17 | 1307294 zebra
zebra's picture

the 30cent is not even enough to stuck in the teeth of the inflation monsters.

Tue, 05/24/2011 - 17:33 | 1306798 Nicholaz
Nicholaz's picture

The banks will sure be wanting something in return for doing this favor to Tim.

Tue, 05/24/2011 - 17:36 | 1306817 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Too bad for them Timmah can not provide immunity from raping hotel maids, because that would be at the top of the list.

Tue, 05/24/2011 - 17:43 | 1306829 Nicholaz
Nicholaz's picture

Maybe Timmy can provide more cooperative maids though.

Tue, 05/24/2011 - 17:45 | 1306836 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Does the Dodd-Fwank bill say anything about Bawknee dressing up as a maid at five star hotels?

Tue, 05/24/2011 - 18:16 | 1306946 Nicholaz
Nicholaz's picture

Not sure but there's still the potential of a French maid named Dominique servicing ...

Tue, 05/24/2011 - 18:41 | 1307017 DoChenRollingBearing
DoChenRollingBearing's picture

Mr Lennon, you are one of the good guys. Send me an email at my name at gmail if you would like a link to my brand new blog. It will cover more than PMs.One real article up now: TEOTWAWKI. The blog is in my real name, that is why I do not post it here. Please convince that it is really you.

Wed, 05/25/2011 - 02:59 | 1308110 Andy Lewis
Andy Lewis's picture

Maybe at a Weight Watchers spa.  The sight of him as a maid would make anyone puke up at least five pounds worth.

Tue, 05/24/2011 - 20:12 | 1307271 Reese Bobby
Reese Bobby's picture

I did not have rape with that woman.

Don't you know who I am!!!  Don't you know who I am!!!

Wed, 05/25/2011 - 00:25 | 1307926 Hephasteus
Hephasteus's picture

Don't worry taxpayer baby. You're not going to lose your job. You're not going to lose your job.

Tue, 05/24/2011 - 17:33 | 1306800 SparkyvonBellagio
SparkyvonBellagio's picture

Going straight down. Will bust the offering price and then the Markets Implode.

 

 

Get ready.

Tue, 05/24/2011 - 17:59 | 1306886 redpill
redpill's picture

I doubt the PPT would allow that to happen.

 

Tue, 05/24/2011 - 17:37 | 1306803 Robslob
Robslob's picture

They already received a "lifetime" of favors....

Tue, 05/24/2011 - 17:35 | 1306809 Cleanclog
Cleanclog's picture

And drawers full of unearned bonuses.

Tue, 05/24/2011 - 17:37 | 1306804 lizzy36
lizzy36's picture

over/under on days (hours) until AIG breaks price.......GETCO.

Tue, 05/24/2011 - 17:35 | 1306811 SparkyvonBellagio
SparkyvonBellagio's picture

Lack of support will come back to haunt the TBTF's in the future.

They push you out of the way from the semi-truck, then you return the favor by backing over them with your car as you leave waving.

 

 

 

Tue, 05/24/2011 - 17:38 | 1306812 treemagnet
treemagnet's picture

reminds me of the euro - the handshake deal during good times turns to shit at the first sign of trouble.

Tue, 05/24/2011 - 17:39 | 1306816 ABG LINE
ABG LINE's picture

---)--)@

To my HFT friends.

 

Tue, 05/24/2011 - 17:42 | 1306825 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

After hours is down haha!  Good luck Timmah! 

Tue, 05/24/2011 - 17:49 | 1306845 kito
kito's picture

look on the bright side, chrysler paid back nearly all of their govt loan today.

Tue, 05/24/2011 - 17:52 | 1306854 Gubbmint Cheese
Gubbmint Cheese's picture

unlike DSK's hotel maid - this one won't go down.

(thanks to the Fed's invisible hands)

"Its okay baby, just buy the issue".

 

 

 

 

 

Tue, 05/24/2011 - 17:54 | 1306870 XenoFrog
XenoFrog's picture

I wouldn't invest in this pig even if it were a guaranteed win.

Tue, 05/24/2011 - 17:52 | 1306862 The Axe
The Axe's picture

Please this deal is complete bullshit..Timmy still has a shitload of crap parked in Maiden Lane for US...ha ha   And tomorrow they will say " taxpayers made money....ha ha ha ha

Tue, 05/24/2011 - 17:57 | 1306866 redpill
redpill's picture

So we bailed out AIG with taxpayer funds to save the large banks, many of which also got taxpayer funds, so that we can continue to debase the currency and lower the value of taxpayer funds and give money to the large banks at no interest so they can turn around and use those taxpayer funds to buy the AIG IPO to "pay back" the taxpayer funds?

I mean, really?

 

Tue, 05/24/2011 - 17:59 | 1306873 kito
kito's picture

which currency is debased? im seeing a stronger dollar every day.

Tue, 05/24/2011 - 17:58 | 1306879 redpill
redpill's picture

By what measure?  How is the dollar stronger if it buys less?

Tue, 05/24/2011 - 18:02 | 1306899 john39
john39's picture

stronger relative every type of monoply money we have been coerced into using.

Tue, 05/24/2011 - 18:19 | 1306945 kito
kito's picture

last i checked , that monopoly money is the measure of and against all else, including gold and silver. i dont see the commodities price charts reading, "price of gold is worth 2 cows". from where i stand, i see the price chart of gold valued in dollars. the same dollars that everyone else is flooding into now because its still a safe haven. we can make conjectures about what might be, and its certainly smart to hedge accordingly, but for now the monopoly money reigns supreme.

Tue, 05/24/2011 - 19:13 | 1307104 sun tzu
sun tzu's picture

Hey fruitfly, try looking at the dollar index over the past two years instead of the past ttwo weeks.

Tue, 05/24/2011 - 18:04 | 1306904 Raynja
Raynja's picture

three guys get shot multiple times, one lost less blood than the other two.

That means hes healthy, right?

Tue, 05/24/2011 - 18:13 | 1306921 kito
kito's picture

by measuring against other currencies. 

Tue, 05/24/2011 - 18:38 | 1306990 alexanderstollznow
alexanderstollznow's picture

actually, no, that is not what happened.  AIG was bailed out mostly by collateralised Fed loans.  unless i have missed something, those loans have been paid back to the Fed.  true, that still leaves the USA out of pocket to AIG, but as AIG is still in business, one might suppose that over time, that will be paid back too.

the banks to which you refer had to get their money from AIG, because AIG did not go bankrupt, and in case this frigging basic point about the law has escaped everyone's attention, if you dont pay your debts, you will be wound up by your creditors ie bankrupt, and if you dont go bankrupt then you have to pay your debts.  NOT being wound up was the whole point of keeping AIG in business, and that was done because AIG did have, and still has, a viable business, but had a liquidity problem after its downgrade.

even if you are the US govermment, if you lend to or invest in a company, it still has to pay its debts.  particularly when those debts are business debts incurred in exchange for fees paid to AIG by the banks for insurance.  recall: AIG is an insurance company?  right? 

in the meantime, the banks in question have paid back their TARP investments with interest and the value of the warrants they issued, and the other TARP investments have also been pretty much all paid back.

in fact, in the big scheme of things, TARP has hardly cost anything.

just dont let the facts get in the way of political agenda, of course.

i think you will find that 'the taxpayer' is not giving money at no interest at all to banks.  the rate which is at zero is Fed Funds.  you should look up exactly what 'Fed Funds' is.   honestly, it makes me laugh how often i read references to 'sheep' and 'sheeple' on ZH!  never have i read so many people bleating out the same bullshit as each other, as on ZH.

Tue, 05/24/2011 - 19:13 | 1307112 Anonymouse
Anonymouse's picture

Let's assume you are correct for the moment, and TARP has hardly cost anything.

What is the risk-adjusted return on this "investment"?  Don't forget to adjust for risk taken onto the Fed's books and costs to the government in support to that specific business, also government guarantees required.  Also, the impact to the economy of the intervention (such as losses to savers from ZIRP).

Hardly anything at all.

Tue, 05/24/2011 - 19:28 | 1307138 sun tzu
sun tzu's picture

unless i have missed something, those loans have been paid back to the Fed. 

 

Yeah you have missed something, you stupid douchebag. AIG never paid back the $182 billion. They certainly didn't earn $182 billion the past two years and their assets were never worth that much even if they were to liquidate.

in fact, in the big scheme of things, TARP has hardly cost anything.


Nov. 13 (Bloomberg) -- Neil Barofsky, the special inspector general for the $700 billion U.S. financial-industry bailout, said the program will “almost certainly” result in a loss to taxpayers.

“We need to temper or be realistic about our expectations, a dollar-for-dollar return is just highly unrealistic,” he said yesterday at the Bloomberg Washington Summit. “It’s almost certainly going to be a loss.”

 

So the government just happened to invest in AIG right as it was about to collapse. just as luck would have it, AIG owed a shitload of money to investment banks all over the world. As a result, the taxpayers had to pay AIG's debts. 

 

To summarize, you're a retarded piece of shit.

Tue, 05/24/2011 - 21:30 | 1307509 colonial
colonial's picture

TARP is only part of the safety net.  And the big bank pay back really helps.  But...let's not forget we're still on the hook with GM, Chrysler, Ally Bank, over $100B in guarantees on MBS and $150+B in Fannie and Freddie. 

So big deal, AIG pays off $6B.  We've got a long way to go

 

Tue, 05/24/2011 - 21:35 | 1307515 A Nanny Moose
A Nanny Moose's picture

Agenda? Pot, meet kettle. The math, and the rule of law are a-political.

What message do we send to gamblers who made bad bets, by bailing them out...oh sorry...loaning them money at negative real interest rates; accepting collateral which, thanks to Mark-To-Unicorns-Shitting-Skittles accounting, gamblers are able to value at 100 cent/$, while indications are that the the recovery value is somewhere around 40-60%. Will we be getting back 100 cents/$ when we "buy" these assets back?

Don't think for a minute that a slap on the wrist, and a "that's OK, just don't do it next time," is going to prevent this from happening again. The only question left to answer is; how will unintended consequences manifest next time?

Tue, 05/24/2011 - 21:58 | 1307597 lizzy36
lizzy36's picture

Depends on what you mean by cost anything.

For future reference i have included my source. The next time you want to give a lecture you might want to use some facts and cut out the hyperbole.

The Treasury Department is authorized to spend a maximum of $475 billion on the TARP (In July 2010, the financial regulation overhaul reduced TARP’s spending cap to $475 billion from the original $700 billion.)

Altogether, accounting for both bailouts, $573 billion has gone out the door—invested, loaned, or paid out—while $260 billion has been returned.

The Treasury has been earning a return on most of the money invested or loaned. So far, it has earned $60 billion. When those revenues are taken into account, $253 billion is the net still outstanding as of May 23, 2011.

As regards AIG:

Disbursed:$67,835,000,000 Returned:$9,146,447,248 NET OUTSTANDING:$58,688,552,752 My political agenda is truth. Also, your astute calculations forgot to include opportunity cost and moral hazard. Of course the true cost of TBTF will not be know until the next crisis. Figure about 2 years. Source:http://projects.propublica.org/bailout/entities/8-aig Disbursed $67,835,000,000

Wed, 05/25/2011 - 01:27 | 1307998 I am a Man I am...
I am a Man I am Forty's picture

nice liz

Tue, 05/24/2011 - 17:55 | 1306871 moldygoat
moldygoat's picture

With all the great IPO's lately, this one is sure to do well. Is AIG a search engine?

Tue, 05/24/2011 - 17:57 | 1306875 redpill
redpill's picture

yes the URL is joogle.com

Wed, 05/25/2011 - 08:38 | 1307135 Cthonic
Cthonic's picture

No it's like Groupon but with maids.  Lots and lots of maids.  Ergo the attraction of Goldman Sachs, JPMorgan Chase, Bank of America Merrill Lynch and Deutsche Bank underpants, er underwriters.

Tue, 05/24/2011 - 18:00 | 1306874 Rainman
Rainman's picture

It's embarrassing....da gubmint's just setting up a bunch of greater fools....meaning CalPers of course.

Tue, 05/24/2011 - 18:03 | 1306888 magpie
magpie's picture

One day of POMO.

Next, please.

Tue, 05/24/2011 - 18:04 | 1306892 Dolemite
Dolemite's picture

Not the time to BTFD....

Stocks look heavy

http://deadcatbouncing.blogspot.com/

Tue, 05/24/2011 - 18:05 | 1306897 monopoly
monopoly's picture

Just another piece to this huge puzzle. We are moving along just fine. Prepare, and enjoy.

Are we taking less vacations all of a sudden. PCLN. lol.

Tue, 05/24/2011 - 18:14 | 1306939 carbonmutant
carbonmutant's picture

Why does it make that ticking sound...?

Tue, 05/24/2011 - 18:31 | 1306974 RobotTrader
RobotTrader's picture

Based on how COF, AXP, DFS "rose from the grave" and rose 500% since 2009....

No telling what this AIG will do over the next 3 years.

Tue, 05/24/2011 - 19:59 | 1307229 firstdivision
firstdivision's picture

imploding and taking out several mutual funds and pension funds

Tue, 05/24/2011 - 18:40 | 1307016 bogey4
bogey4's picture

It was 300 million shares, not 200.  Thus raising $8.7 billion, not $5.8 billion. 

Other than that, I have no concerns.

Tue, 05/24/2011 - 18:59 | 1307065 razorthin
razorthin's picture

How many shares did the Bernank buy?

Tue, 05/24/2011 - 19:01 | 1307072 magpie
magpie's picture

How many did he not buy ?

Tue, 05/24/2011 - 19:02 | 1307081 razorthin
razorthin's picture

of course that's true.  rephrased - how many shares did he transfer directly to his balance sheet?

Tue, 05/24/2011 - 19:54 | 1307220 firstdivision
firstdivision's picture

I bid 1 dollar Bob

Tue, 05/24/2011 - 20:14 | 1307284 Atomizer
Atomizer's picture

This AIG reminds me of LinkedIn advertising shovel ready jobs. Have a look.

Online social networking firm LinkedIn Corp. reported first-quarter revenue from recruiting operations jumped 173.7 percent year over year, according to the prospectus for its initial public offering last week. It also cited “traditional recruiting firms” among its competitors.

Look out Monster.com, there's a new sheriff in town. LOL.

Got to love data mining companies disguising themselves as social networking peer groups.

http://www.staffingindustry.com/Research-Publications/Daily-News/LinkedIn-Recruiting-Revenue-Up-174

Tue, 05/24/2011 - 20:35 | 1307339 Atomizer
Atomizer's picture

Build your data points.

Closing of the American International Group, Inc. (AIG) Capitalization Plan

For release at 4:30 p.m. EST January 27, 2011 The Board's H.3 statistical release, "Aggregate Reserves of DepositoryInstitutions and the Monetary Base," reflects the closing of the AmericanInternational Group, Inc. (AIG), recapitalization plan, which occurred onJanuary 14, 2011. The recapitalization plan was designed to restructure andfacilitate repayment of the financial support provided to AIG by the U.S.Department of the Treasury and the Federal Reserve. Upon closing of therecapitalization plan, the credit extended to AIG by the Federal Reserve Bankof New York under the revolving credit facility (AIG loan), including accruedinterest and fees, was repaid in full. The AIG loan is reported in the "Creditextended to American International Group, Inc., net" category of total andother borrowings from the Federal Reserve, which is shown in table 1a of theH.3 statistical release. The average value of "Credit extended to American International Group, Inc.,net" for the two-week period ending January 26, 2011, reflects the closing ofthe AIG recapitalization plan. The average value for the two-week periodending January 26, 2011, is greater than zero because the AIG loan was repaidin full on January 14, the second day of this two-week period. Table 1a willcontinue to show historical values for "Credit extended to AmericanInternational Group, Inc., net" to provide a complete disaggregation of totaland other borrowings from the Federal Reserve for past periods.

Tue, 05/24/2011 - 21:33 | 1307518 glenlloyd
glenlloyd's picture

who would be stupid enough to buy this crap...I mean really.

Tue, 05/24/2011 - 22:41 | 1307698 palmereldritch
palmereldritch's picture

Treasury gets $5.8 billion in cash proceeds (200MMx $29), which is immediately offset by $35 billion in debt issued today, another $35 billion tomorrow, and $29 billion on Thursday. One step forward. Fifteen steps back.

C'mon!   It takes money to make money.

Not sure who said that...I suspect it was probably a famous bank robber.

Wed, 05/25/2011 - 01:27 | 1307996 I am a Man I am...
I am a Man I am Forty's picture

that prince dude from saudi is all over this

Wed, 05/25/2011 - 03:04 | 1308115 Andy Lewis
Andy Lewis's picture

30 bucks a share for AIG?  I wouldn't pay two shits much less two cents.

Mon, 05/30/2011 - 20:49 | 1323783 brand shoes
brand shoes's picture
Welcome to visit Asics Shoe Outlet online shop, choose your favorite style here. You can buy Asics Tiger Shoes, Asics Casual Shoes, Asics Netball Shoes, Asics Kayano Shoes with free shipping. Asics shoes online from australia
supply men's and women's asics gel running shoes for sale .Get Gel Running Shoes from Asics Australia online sale, enjoy no tax, free shipping, high quality and cheap price. Come on!Just click add your favorite Asics Shoesto the shopping cart now. Enjoy online shopping experience here.
Do NOT follow this link or you will be banned from the site!