Treasury Selling Another $4.5 Billion In AIG Stock, AIG To Buy $3 Billion Of Offering

Tyler Durden's picture

Moments ago AIG stock was halted with many scratching their heads as to the the reason why. Here it is, courtesy of Bloomberg:


Full release:

American International Group, Inc. (AIG) today announced that the U.S. Department of the Treasury (Treasury) has launched an offering of $4.5 billion of its AIG common stock, par value $2.50 per share (AIG Common Stock). The Treasury will also grant a 30-day option to the underwriters for the offering to purchase additional shares to cover over-allotments, if any.


In connection with Treasury’s offering, AIG has indicated to Treasury that it intends to purchase shares of AIG Common Stock in the offering, at the initial public offering price, pursuant to an authorization granted by the AIG Board of Directors to purchase up to $3 billion of AIG Common Stock.


Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman, Sachs & Co., and J.P. Morgan Securities LLC have been retained as joint bookrunners for the offering.

Bottom line: another $1.5 billion in AIG shares are about to hit the market when one nets out the cash transfer between Treasury and AIG, which naturally had to be "bid" going into this announcement. Of course, in this broken market this will be seen as bullish. At least initially. Then the selloff. Or not. Who cares anymore.

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Silver Bug's picture

What a complete joke. Could this be any more of a farce.

engineertheeconomy's picture

"German Debt Auction" in the news today should instead read "German Slave Auction"

camaro68ss's picture

glad i cashed out my 401k, yes it did not turn into a 201k, with AIG 4 months ago.

Suck it AIG

MillionDollarBonus_'s picture

Yet another successful PP initiative that, despite the ramblings of doomer libertarians has turned out to be a shining success. I predict that this offering will be well bid, just like the last one. AIG is a sterling corporation, that just made a FEW mistakes. But spiteful libertarians are so caught up with criticizing the emergency financing, that they ignore the facts. It's pretty sad, when you think about it. 

El Oregonian's picture

I gave you a "Greenie" just because your a persistent troll-bot. I mean, really... How can someone constantly absorb rejection on a daily basis on your "Market-Love Fest, that everything is beautiful in the markets with these rose-colored glasses I wear".

Personally, I am not the brightest bulb but thanks to you I look like a 100,000 Watt Halogen floodlight genius of critical thinking.

Thumbs up MDB, you make me look good!

BTW if they NEEDED "Emergency Financing" tells me they were not so sterling... Just saying...

Winston Churchill's picture

Don't you get MDB.

His posts are always just trying to get a 'rise' out of someone.

You're todays victim.

El Oregonian's picture

No, I get it. I haven't just fallen off the turnip truck, I just chuckle and shake my head 99.9% of the time I read his comments.

Kinda like reading the daily funnies in the paper.

I'm glad he's here for the comic relief and incourage him every once  in awhile (you know, throw him a bone) just so I can get my daily laugh.

I'd sure hate to lose the "Suspension of Dis-belief" moments he brings...

No victim... Just a bone once in awhile for a good carney barker...

otto skorzeny's picture

more clever than the "stack silver"/"got lead?" pablum ad nauseum

MeelionDollerBogus's picture

OMG. Don't you realize the two event-space inflections being tested here?!

CONDITION 1: negative replies to MDB consistently go up

CONDITION 2: green-arrows consistently out-number red-arrows for MDB

Each such condition describes a heuristic for market & reader sentiment.

Man, must everything be spelled out down to the pixel and operand?


fonestar's picture

rigged market crapitalism

HelluvaEngineer's picture

This is the dumbest thing I've heard today, and that's really saying something.

aint no fortunate son's picture

Somebody better tell the specialist what happened - he must be taking one hell of a dump - announcement via ZH was at 2:17... its 2:53 now and still halted...

LawsofPhysics's picture

I thought the government, when using taxpayers monies  was only allowed to buy high and sell low?  I am confused.  Anyone know what the taxpayer paid for those shares?

fuu's picture

As of January 2012, TARP had about $50 billion invested in AIG according to one report. Break even for the government was figured at $28.73 a share v. then-current share price of about $25.[56]

LawsofPhysics's picture

So, in other words, the taxpayer is losing their ass on this, end this CORPERATE WELFARE bullshit.

fuu's picture

Perhaps the $2.50/share is a typo in the release.

LawsofPhysics's picture

"Par value" will be decided to the benefit of someone, but most likely not the taxpayer.

deepdish's picture

Par value was decided several decades ago.

hedgeless_horseman's picture



I can't wait to watch AIG's chairman when he airs his television commercial...

"...That's why I am here to announce we have repaid our government loans..."

Fuck you, Ed Whitacre, you lying cock sucker!

More than a year after G.M.’s return to public ownership, the government still owns just less than 30 percent of the company, or about 500 million shares.

Fuck you, GM! 

Fuck you AIG!

Fuck moral hazard



Hi Ho Silver's picture

Get a grip. AIG is not GM.

AIG has paid back the Fed and is now in striking distance of making the U.S. taxpayer whole.

Thanks to Robert Benmosche, and thousands of employees who put nose to grindstone, American citizens won't foot the bill for the greed of a few handfuls. At least not in this case.

Disclosure: I lost about $40k when AIG crashed. I think the bailout was fascist and wrong. But I'm not going to let that blind me to AIG's potential for profit in the coming seasons.

In the auto industry my money's on Ford.

hedgeless_horseman's picture



AIG is a poster child for socializing losses and privatizing gains. 

AIG's bond traders are best catagorized by the statement that everyone is a genius in a bull market.

I'm not going to let that blind me to AIG's potential for profit in the coming seasons.

What about AIG's potential for loss?  Oh yeah, you have the taxpayer to cover that outcome.


otto skorzeny's picture

good luck w/POS ford- the only reason their sales were decent was because the japs couldn'y get their stuff to market- now they are and Big 3 are headed down. Chrysler will plummet beacause they make gas hogs and gas is climbing rapidly again

TheFineKid's picture

Didn't Chrysler sell Jeep to Fiat? About every third car I see on the road lately is a Jeep Wrangler.

deepdish's picture

28.72 per share.


Has sold in several patches so far. At 29, 29 and 30.5 per share.



slaughterer's picture

A logical reaction to this would be a 3% plunge in AIG SP, but the algos will just see the words "AIG share buy"

Seasmoke's picture

there is so much paper everywhere !!!!!!!.........careful with the paper cuts

SeverinSlade's picture

If AIG is so healthy, why didn't they buy all of the $4.5 billion?

slaughterer's picture

Since Hilsenrath did not work, this news needs to push the S&P above 1400. 

Dr. Engali's picture

1400 to 1425 , is going to be  resistance the market can't break through.

francis_sawyer's picture

I just called my broker & told him to get me in 45 degrees at any price...

fonzannoon's picture

Is the money from this sale and example of freeing up assets to repo to the banks as per the prior threads?

fonzannoon's picture

This Knight capital thing seems to be going the other way.

Dr. Engali's picture

Nobody wants to be on either side of that trade going into the weekend. Who knows what can happen over the weekend. They could be scooped up for a buck or five bucks. Either way it's probably best to take profits and walk away.

slaughterer's picture

Took my prodits already.  Of course, I am jealous of anyone still holding KCG.  But I could not justify holding KCG this weekend with only a one-day LOC on deck. 

Dr. Engali's picture

There is no reason to be jealous. You made a good trade and a hefty profit. Greed will get people every time. The bids will start drying up soon when the shorts are done covering.

mt paul's picture


better post that on my facebook


greensnacks's picture

Wondering how many drought strickened farms aig insured.

francis_sawyer's picture

You'll get an accounting on that when your next tax bill arrives...

larz's picture

Step aside ill take a 500 large worth

km4's picture

Just like David said here....

David Stockman: "The Capital Markets Are Simply A Branch Casino Of The Central Bank"

Alex: It sounds like what you're saying is that the Fed is effectively paying bankers to stay confident in the Fed, and that the moment that stops – either because the Fed stops paying them or something else shakes their confidence – this all goes down in one big house of cards?

David: Yes, I think that's right. The Fed has destroyed the money market. It has destroyed the capital markets. They have something that you can see on the screen called an "interest rate." That isn't a market price of money or a market price of five-year debt capital. That is an administered price that the Fed has set and that every trader watches by the minute to make sure that he's still in a positive spread. And you can't have capitalism if the capital markets are dead, if the capital markets are simply a branch office – branch casino – of the central bank. That's essentially what we have today.

Alex: That's a pretty stark picture. So as an individual investor, what are we to do? How do we protect ourselves in this type of situation? Should I be owning bonds and staying out of stocks? Should I be owning stocks?

David: No, I would stay out of any security markets. These are unsafe markets at any speed. It's all tied together. As I was saying when the great margin call comes and they start selling the Treasury bond, they'll take everything else with it. Real estate is priced off Treasuries. Mortgaged-backed securities are priced off Treasuries. Corporates are priced off Treasuries. Junk bonds are priced off Treasuries. Everything. The stock market will go into a panic. We don't know when the timing will come – we've never been in a world where there is $15 trillion worth of central-bank balance sheets, like we have today. The only thing I think you can conclude is preservation is the only thing you are about as an investor. Forget about yield. Forget about return. Just keep yourself liquid and preserve your capital, because you can't predict the day when, as I say, the great margin call in the sky comes down.

Hype Alert's picture

So AIG is buying it's stock back from the Treasury with money borrowed from the Treasury, so net-net what is happening?  Nothing?

LawsofPhysics's picture

The taxpayer is paying for the difference.  Bought @ over $25, selling at less than $2.  Socialization of losses bitch, what are you going to do about it?

deepdish's picture

Huh? Selling at 2? The selling share price has not been decided yet. The 2.5 dollar noted in the article is tha par value and has nothing to do with the selling price.


The last time they sold (in May), they sold at 30.5 per share, and in the two offerings before that they sold at 29. The market the next days will decide the selling price.


But it is still a shitty deal from the government side, but not as shitty as you suggest.

LawsofPhysics's picture

"but not as shitty as you suggest."

We will see, corporate welfare, either way.

deepdish's picture

The system is a corrupt cleptocracy, heavily tilted toward a fascistic corporative Mussolini like mixture of state and corporate interests.


But there is no point in making up taxpayer losses in order to deliver the message. It is bad enough as it is without mixing up par stock values with the stock price.

LawsofPhysics's picture

correct, "par value" will be decided to someone's benefit, and it certainly won't be to the benefit of the taxpayers, who kept this shell of a company alive.  Atlas, continues to shrug, and that which cannot be sustained, won't be. 

deepdish's picture

No. Par value is par value. It has nothing to do with stock price.


When a company is started, the stock has to have a par value. It has no relation to stock value, it is just that the rules says that the par value must be noted. The rules also say that it is illegal to offer a stock offering below par value.


Example. I start a company with 1000 shares. I put in 100 dollar per share in equity, so that the equity is 100 000 dollar. I throw a dice to find a number I can call par value, and I hit number 1. I will then chose par value at 1 dollar per share.

Technically, my balance sheet will now show:

Cash: 100 000


Common stock: 1000

Paid in equity in excess of par value: 99 000


See? It is just a techical term, and it shows a lack of understanding to bring it up in this debate.