They are getting the loan at LIBOR + 8.5%. That's downright punitive.
LIBOR + 8.5% is not a rate at which a company with AIG's business model could survive at. AIG lends to people at around LIBOR + 4% for mortgages or LIBOR + a lower % to insure BBB to AA rated borrowers.
They'll probably have to sell off their assets in a hurry at below fair value. The longer they wait, the more pain the high interest inflict on them.
Well, thanks to you I just learned something. I had no idea the US government used the London index to figure out rates for loans. I actually went and looked it up; and you're totally correct.
They are getting the loan at LIBOR + 8.5%. That's downright punitive.
LIBOR + 8.5% is not a rate at which a company with AIG's business model could survive at. AIG lends to people at around LIBOR + 4% for mortgages or LIBOR + a lower % to insure BBB to AA rated borrowers.
They'll probably have to sell off their assets in a hurry at below fair value. The longer they wait, the more pain the high interest inflict on them.