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.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Cleanclog's picture

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

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.

Chippewa Partners's picture

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

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.

I am a Man I am Forty's picture

uh aig down more than 50 percent in 4 months

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?

zebra's picture

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

Nicholaz's picture

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

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.

Nicholaz's picture

Maybe Timmy can provide more cooperative maids though.

Mr Lennon Hendrix's picture

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

Nicholaz's picture

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

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.

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.

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!!!

Hephasteus's picture

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

SparkyvonBellagio's picture

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



Get ready.

redpill's picture

I doubt the PPT would allow that to happen.


Robslob's picture

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

Cleanclog's picture

And drawers full of unearned bonuses.

lizzy36's picture

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

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.




treemagnet's picture

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

ABG LINE's picture


To my HFT friends.


Mr Lennon Hendrix's picture

After hours is down haha!  Good luck Timmah! 

kito's picture

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

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".






XenoFrog's picture

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

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

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?


kito's picture

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

redpill's picture

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

john39's picture

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

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.

sun tzu's picture

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

Raynja's picture

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

That means hes healthy, right?

kito's picture

by measuring against other currencies. 

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.

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.

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.

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


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?

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: Disbursed $67,835,000,000

moldygoat's picture

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

redpill's picture

yes the URL is

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.

Rainman's picture

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

magpie's picture

One day of POMO.

Next, please.

Dolemite's picture

Not the time to BTFD....

Stocks look heavy