Insurer American International Group Prices Preferred Issue

Giant insurer American International Group (NYSE:AIG) has priced a new issue of fixed rate, non-cumulative preferred stock. This is the 1st time AIG has been in the preferred marketplace in many years.

The coupon is 5.85% and the issue is investment grade with a rating of Baa3 from Moodys and BBB- from Standard and Poors.

The issue is 20 million shares with no over allotment shares.

The issue is non-cumulative in respect to dividends, but dividends will be qualified for lower taxes.

The pricing term sheet can be seen here.

Shares will trade on the NYSE under the permanent ticker of AIG-A, but in the meantime will trade on the OTC Grey Market under temporary ticker AIGGZ.

17 thoughts on “Insurer American International Group Prices Preferred Issue”

  1. Just a comment on the results from an experiment re: CN Prefs as has been talked about here. I know this is a focused site and will try to remain on topic for Tim’s sake!
    Bot some EBBNF to watch. IT was in an IRA since I did not know at the time it was QDI or not. On 3-4 the div hit the account as QDI. Great! Now to move it to the Taxable account. I placed a sell on TD regular electronic system. I placed the sell just over the last trade and THEN went over to my Tax account and placed a Buy at $.02 higher same lot size. Electronics should make the match right? Not.
    Waited then called TD and she said I did not need a specialist trader. She saw the orders, and could not explain it. She suggested that I just use their internal transfer tool. I asked why I would want to move money from a tax shelter into a taxable account, granted I am over 59.5 years and it is a Roth. Hmm. After consideration, the ‘phone-answerer’ said she would make a call and I waited and watched. The Buy hit in about ten minutes at my lower price. The higher Sell is still in my IRA with an open order to sell at a higher price.
    Just a lesson for me to in going slow enough to really understand that there is still an expansion into turf that is shaded between traditional and elec brokering. All in all, I will slowly and surely, lessen trading and proceed with my plans to turn the corner for my personal rework and if necessary hold an overweight posistion. Anybody need 400 EBBNF on a direct assignment? As I’ve heard, “know and stay in your lane!”

    1. Joel, I bought a large position in Canadian Fortis (FTRSF) at Merrill Edge on their electronic app. I am up nicely on the position and wanted to see what the process was when I went to sell this preferred. I was blocked electronically from selling through their app and called my representative in Arizona. He told me he had to get “clearance” for me to sell any portion as they now have a “direct restriction” on buys and sells of Canadian FTRSF. He did put in my GTC order (it has not filled the last 2 trading days). I just do not like any restrictions, trouble or time waste for me to have to call my representative to get a trade done. I have traded Canadian AWRRF many times and have never had this isssue before. Wishing you profitable investing, Nomad

      1. Nomad, you got me curious now…It seems like the noose is forming on buying these issues. Vanguard has choked down too. I think these tickers were assigned and never really used and our discussions have caused activity to get noticed… For example…FTRSF and ALTGF had never traded OTC until I made first purchase…ERRAF had 3 times in past couple years prior, to recent purchases. Dont quite understand the problem and their regulations. These are infinitely safer issues than 85% of the preferreds on the market in US in terms of credit quality…
        Speaking of Merrill. I had another online friend say Friday they blocked him from buying ALTGF because they “dont cover it”. Whatever, their braincells are small and Emera doesnt need to be covered by them. The credit agency ratings agencies due just fine without their needle brained opinions.
        Kind of hard to fight the sytem though unless you have foreign trading access. Thankfully irrelevant to me as I am about 35% into these issues and have my full permanent holding allotment….TD however is showing no signs of blocking online. They sell anything. I probably could buy Xanax meds on OTC through them, lol.

    2. Joel, just to clarify, why didnt you just have them moved without conducting a trade? I was shuffling from tax free to taxable but to different brokerages. It was ALTGF and FTRSF. One I lost 3 cents a share trading and the other I made 6 cents. For me I have noticed to expediate my trades I put sell 50 cents below and 50 cents above on buys and the transactions then occured right at last TSX trade. I dont recomend doing that but I have done it half dozen times just to “wake the system up”. Never got ripped off. This kind of help verify to me the liquidity from my brokerage anyways is flowing through to TSX. I still need to shuffle ERRAF out, but since I will be establishing a taxable account soon where they sit in my tax free, I will just have them move to taxable.

      1. As an echo, I was trying to go from a Roth and into a Taxable and do not want a Roth withdrawal to be taken out by a direct transfer, even tho I am over 59.5 years. Like I said I am going to tiptoe in and learn the mechanisms. Just a report of my experience. I usually buy stuff that I can sit on anyway with no urgency.
        I have three other CN with F symbols. PS: If interest rates go down significantly over say the next 18 months which will probably take a recession; some of the non-bank, close-in, CN resets may get called. I’m having a hard time distinguishing what those may be and which current yields I would be okay sitting on while I wait. That scenario would prob tank the USD too. Just more mind candy right now. It is hard to speculate in the conservative pref markets for large cap gains and get that right. JA

        1. Joel, I was under impression you could just move the shares, not the cash and its a non taxable event. I was wondering what your concern was. Definitely something to know for sure. But I am planning on moving ERRAF out of tax free into taxable but no money moving accounts.

        2. Joel, you have a right to be concerned and check it out thoroughly. I had an online friend do this and he informed me it was a distribution and was counted as an RMD. He knew this prior to moving them though. So this looks like I will not be transferring shares myself.

          1. “Moving” shares from a Roth to a taxable account is a distribution. Don’t do if that’s not the intended consequence. If it’s a highly illiquid issue that you want to move, sell it to yourself. Some risk that someone will buy it out from under you but then life isn’t risk free.

            1. Bob, hopefully its to another separate brokerage account. I did that once and got an ass chewing and threatening to shut down my account if I did it again.

            2. Bob, I think you are right, sell it to the market and buy it from the market. A IRA needs to be at arms length but I’m not qualified to say that applies here. I’d probably check with my accountant if I wanted to do it.

          2. I’ll check. As I am going thru a reorg at age 61 that transfer-tool would REALLY help me and save some on commissions. Once I stopped, slowed down and wrote it all out on a chart (hand, don’t do excel stuff) I realized I have gotten about half way thru a jumbled bag of positions in differing accounts. It’s nice to not be working and just do this makeover…over time.

        3. Joel, I think you just need to raise hell with brokerage…I just saw that my ERRAF 15% tax withholding was rescinded and nothing was taken out. Another online friend stayed on their butts. And they then figured out they did screw up…He was fighting over ERRAF being withheld. Since we had same stock in same brokerage, TD fixed problem and everyone benefited from it. So now I do not have to worry about moving them as I am getting the full divie now.

    3. Joel. very glad to hear your withholding went without a hitch. Just because your order is entered on OTC is no guarantee it’s showing on TSX. The OTC is pretty opaque. OTC can have delays. Sometimes significant.

  2. I agree fair price. There’s not much high quality IG yielding this. I doubt it’s a candidate for much capital appreciation but I expect downside limited and good for “safe” income and parking. I bought some $25.05.

  3. Just bought 200 shares at $25.05. Not thrilled with 5.85%. But could live with it on an IG, if a short term flip does not present itself.

    1. Same a purchased a full share which is 4 percent of my investments. Agree can live with it but hopefully can flip if for capital gains. At end of last year, it seemed like a minimum 6% market for lowest rated IG offerings. It now looks closer to 5.75%

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