AIG 2005 Annual Report Download - page 157

AMERICAN INTERNATIONAL GROUP, INC. AND SUBSIDIARIES
extended to include aircraft to be delivered through May 31,
9. Debt Outstanding
2006. The facility becomes available as the various European
Continued
Export Credit Agencies provide their guarantees for aircraft
(d) Notes and Bonds Payable: based on a six-month forward-looking calendar, and the
interest rate is determined through a bid process. At
(i) Notes and Bonds Payable Issued by AIGFP:
December 31, 2005, ILFC had $1.4 billion outstanding under
At December 31, 2005, AIGFP’s notes and bonds outstanding, this facility. Borrowings with respect to these facilities are
the proceeds of which are invested in a diversified portfolio of included in Notes and Bonds Payable.
securities and derivative transactions, were as follows: In August 2004, ILFC received a commitment for an Ex-Im
Bank comprehensive guarantee in the amount of $1.68 billion
Range of U.S. Dollar to support the financing of up to 30 new Boeing aircraft. The
Maturities Range of Carrying
(dollars in millions) Currency Interest Rates Value initial delivery period from September 1, 2004 through
August 31, 2005 has been extended by ILFC to August 31,
2006-2039 U.S. dollar 0.09-8.60% $ 18,514
2006. ILFC did not have any borrowings outstanding under
2006-2010 United Kingdom pound 4.59-4.68 2,370
this facility at December 31, 2005. From time to time, ILFC
2006-2024 Euro 0.29-9.25 2,922
2005-2009 New Zealand dollar 4.17-8.35 1,185 enters into various bank financings. As of December 31, 2005
2006-2035 Japanese yen 0.01-4.00 1,050 the total funded amount was $1.4 billion. The financings
2006-2015 Australian dollar 1.14-4.89 104 mature through 2010. One tranche of one of the loans totaling
2007-2024 Swiss francs 0.25-1.38 247 $410 million was funded in Japanese yen and swapped to
2007-2015 Other 1.03-3.72 71 U.S. dollars.
Total $ 26,463 In December of 2005, ILFC entered into two tranches of
junior subordinated debt totaling $1.0 billion. Both mature on
AIGFP economically hedges its notes and bonds. AIG December 21, 2065, but each tranche has a different call
guarantees all of AIGFP’s debt. option. The $600 million tranche has a call date of
December 21, 2010 and the $400 million tranche has a call
(ii) Notes and Bonds Payable Issued by ILFC: As of date of December 21, 2015. The note with the 2010 call date
December 31, 2005, notes aggregating $15.01 billion were has a fixed interest rate of 5.90 percent for the first five years.
outstanding with maturity dates from 2006 to 2065 and The note with the 2015 call date has a fixed interest rate of
interest rates ranging from 2.95 percent to 6.63 percent. Notes 6.25 percent for the first ten years. Both tranches have interest
aggregating $3.52 billion are at floating interest rates and the rate adjustments if the call option is not exercised. The new
remainder are at fixed rates. interest rate is a floating quarterly reset rate based on the
The foreign exchange adjustment for the foreign currency initial credit spread plus the highest of (i) 3 month LIBOR,
denominated debt was $197 million at December 31, 2005 and (ii) 10-year constant maturity treasury and (iii) 30-year
$1.2 billion at December 31, 2004. ILFC had $13.13 billion of constant maturity treasury.
debt securities registered for public sale at December 31, 2005. AIG does not guarantee any of the debt obligations of
As of December 31, 2005, $8.66 billion of debt securities were ILFC.
issued. In addition, ILFC has a Euro Medium Term Note
Program for $7.0 billion, under which $4.98 billion in notes (iii) Notes and Bonds Payable Issued by AGF: As of
were sold through December 31, 2005. ILFC has substantially December 31, 2005, AGF notes aggregating $983 million were
eliminated the currency exposure arising from foreign currency outstanding with maturity dates ranging from 2006 to 2010 at
denominated notes by economically hedging that portion of interest rates ranging from 4.03 percent to 8.45 percent.
the note exposure not already offset by Euro denominated In 2005, AGF increased its shelf registration statement by
operating lease payments, although such hedges do not qualify $10.0 billion. AGF had $11.1 billion of debt securities
for hedge accounting treatment under FAS 133. Notes issued registered and available for issuance at December 31, 2005.
under this program are included in Notes and Bonds Payable. AGF uses the proceeds from the issuance of notes and bonds
ILFC had a $4.3 billion Export Credit Facility (ECA) for for the funding of its finance receivables.
use in connection with the purchase of approximately 75 AIG does not guarantee any of the debt obligations of
aircraft delivered through 2001. This facility was guaranteed by AGF.
various European Export Credit Agencies. The interest rate
(iv) Notes, Bonds and Debentures Issued by AIG:
varies from 5.75 percent to 5.90 percent on these amortizing
ten-year borrowings depending on the delivery date of the (A) Zero Coupon Convertible Senior Debentures: On
aircraft. At December 31, 2005, ILFC had $1.2 billion November 9, 2001, AIG issued zero coupon convertible senior
outstanding under this facility. The debt is collateralized by a debentures in the aggregate principal amount at stated maturity
pledge of the shares of a subsidiary of ILFC, which holds title of $1.52 billion. The notes were offered at 65.8 percent of
to the aircraft financed under the facility. principal amount at stated maturity, bear no interest unless
In May 2004, ILFC entered into a similarly structured ECA contingent interest becomes payable under certain conditions
for up to a maximum of $2.64 billion for Airbus aircraft to be and are due November 9, 2031. The net proceeds to AIG were
delivered through May 31, 2005. The facility has since been $990 million. Commencing January 1, 2002, holders may
AIG m Form 10-K 105