Saturday, November 8, 2008

AIG - thy name is opaque

I have been thinking about playing in the common securities  of AIG.  My view is that an awful lot of CDOs (and their CDS) are trading at levels way below where they will eventually settle.  [Illiquid markets and inability to borrow etc.]

In that case AIG common may be a good bet - because the collateral posted for future losses will be in part returned.

Then along comes this story (hat-tip to Felix) that AIG is lobbying hard to get the interest payments on the government loan reduced.  This suggests further liquidity problems.

I think I will leave that one in the "too hard basket" at least for a while.

John
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