BOOM!!! BREAKING: AIG Debt Rating Cut By Fitch, Financial Markets On The Edge
AIG Debt Rating Cut By Fitch, Financial Markets On The Edge
Monday, 15 September 2008
22:37:08 GMT
Written by John Kicklighter, Currency Strategist
Fitch rating agency has pushed AIG one step closer to the edge. One of the top three debt rating firms, Fitch lowered AIG's rating from AA- to A and left the insurer on watch for further reductions. While this was a modest step, it has been amplified by the AIG's demand for $40 billion in capital to bridge outstanding loans. Should the rating firms downgrade AIG, the resulting sell off in assets to meet credit reserves may out burn through even a massive liquidity injection like the one its asking for. Should the firm be allowed to fail, the consequences could be far worse than the reaction to the Lehman Bankruptcy and the dollar and carry trade will take the brunt of the pain in the currency market.
