AIG 2009 Annual Report Download - page 300

American International Group, Inc., and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
call date of December 21, 2010 and the $400 million tranche has a call date of December 21, 2015. Both tranches
mature on December 21, 2065. The $600 million tranche has a fixed interest rate of 5.90 percent for the first five years.
The $400 million tranche has a fixed interest rate of 6.25 percent for the first ten years. Both tranches have interest
rate adjustments if the call option is not exercised based on a floating quarterly reset rate equal to the initial credit
spread plus the highest of (i) 3-month LIBOR, (ii) 10-year constant maturity treasury and (iii) 30-year constant
maturity treasury.
(iii) Export credit facility: ILFC has a $4.3 billion 1999 Export Credit Facility (1999 ECA Facility) that was used in
connection with the purchase of 62 Airbus aircraft delivered through 2001. This facility is guaranteed by various
European Export Credit Agencies. The interest rate varies from 5.78 percent to 5.86 percent on these amortizing
ten-year borrowings depending on the delivery date of the aircraft. At December 31, 2009, ILFC had 32 loans with a
remaining principal balance of $146 million outstanding under this facility. At December 31, 2009, the net book value
of the related aircraft was $1.8 billion. At December 31, 2008, the interest rate varied from 5.75 percent to
5.86 percent on these amortizing ten-year borrowings, depending on the delivery date of the aircraft. At December 31,
2008, ILFC had 58 loans with a remaining principal balance of $365 million outstanding under this facility. The net
book value of the related aircraft was $2.3 billion. The debt is collateralized by a pledge of the shares of a subsidiary of
ILFC, which holds title to the aircraft financed under the facility.
ILFC has a similarly structured 2004 Export Credit Facility (2004 ECA Facility), which was amended in May 2009 to
allow ILFC to borrow up to a maximum of $4.6 billion to fund the purchase of Airbus aircraft delivered through
June 30, 2010. The facility becomes available as the various European Export Credit Agencies provide their
guarantees for aircraft based on a forward-looking calendar, and the interest rate is determined through a bid process.
The interest rates are either LIBOR based with spreads ranging from (0.04) percent to 2.25 percent or at fixed rates
ranging from 4.20 percent to 4.71 percent. At December 31, 2009, ILFC had financed 66 aircraft using approximately
$4.0 billion under this facility and approximately $2.9 billion was outstanding. At December 31, 2008, ILFC had
financed 41 aircraft using approximately $2.8 billion under this facility and approximately $2.1 billion was outstanding.
At December 31, 2009, the interest rate of the loans outstanding ranged from 0.45 percent to 4.71 percent. At
December 31, 2008, the interest rate of the loans outstanding ranged from 2.51 percent to 4.71 percent. The debt is
collateralized by a pledge of shares of a subsidiary of ILFC, which holds title to the aircraft financed under the facility.
At December 31, 2009, the net book value of the related aircraft was $4.0 billion. At December 31, 2008, the net book
value of the related aircraft was $2.9 billion. Borrowings with respect to these facilities are included in ILFC’s notes
and bonds payable in the preceding table of borrowings.
Under these Export Credit Facilities, ILFC is required to segregate deposits, maintenance reserves and rental
payments received for the financed aircraft into separate accounts, controlled by the trustee of the Export Credit
Facilities, in connection with certain credit rating downgrades. At December 31, 2009, ILFC had segregated
approximately $315 million of deposits, maintenance reserves and rental payments received. Segregated rental
payments are used to pay principal and interest on the ECA facilities as it becomes due. Funds required to be
segregated under the facility agreements fluctuate with changes in deposits, maintenance reserves, rental payments
received and debt maturities related to the aircraft funded under the facilities.
(iv) Bank financings: From time to time, ILFC enters into various bank financings. At December 31, 2009, the total
funded amount of ILFC’s bank financings was $5.1 billion, which includes $4.5 billion of revolving credit facilities. The
fundings mature through February 2012. The interest rates are LIBOR-based, with spreads ranging from 0.25 percent
to 0.40 percent. At December 31, 2009, the interest rates ranged from 0.55 percent to 0.93 percent. On October 15,
2009, ILFC repaid a $2.0 billion tranche of the revolving credit facilities when it matured, using proceeds from the
Term Loans described above.
AIG does not guarantee any of the debt obligations of ILFC.
AIG 2009 Form 10-K 292