Planes, strains and automobiles

12 May 2008 By Richard Beales Follow @richardbeales1

Remember GMAC? GM sold 51% of the finance unit when the carmaking operations seemed to be dragging down its credit ratings and pushing up its funding costs. Now GMAC s US mortgage exposures are weighing it down. Any enthusiasts for separating ILFC from AIG should take note.

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International Lease Finance Corp., the aircraft leasing giant, is considering a split from its parent, American International Group, the Wall Street Journal reported on May 12.

ILFC officials are concerned that insurance group AIG, which reported a $7.8bn quarterly loss on May 8, could face credit rating downgrades that also affect ILFC and push up its cost of funding, the WSJ said.

AIG also said it planned to raise $12.5bn of new capital.

In a May 9 regulatory filing, ILFC disclosed total assets of $46bn and shareholders' equity of $7.1bn at March 31, and net income of $150m for the first quarter of 2008 – a 25% increase over the same period a year earlier.

In putting both AIG's and ILFC's ratings on review for possible downgrade, Moody's said on May 9 that ILFC's ratings, relative to its intrinsic standalone credit profile, benefit from the implicit support of AIG.

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