AIG said to plan 40-year bond sale in show of debt-market faith

(Bloomberg) — American International Group Inc. is showing just how far it’s come in regaining the confidence of debt markets as the insurer bailed out by the U.S. government in 2008 plans bonds it won’t have to repay for 40 years at what could be its cheapest terms ever.

AIG is offering $2 billion of debt today in two parts, including $800 million in 40-year notes that may be sold at about 190 basis points more than similar maturity Treasuries, according to a person with knowledge of the transaction. Proceeds will be used for general purposes, which may include debt repayments, said the person, who asked not to be identified without authorization to speak publicly.

“The terms they are getting are pretty darn attractive,” Matthew Duch, a money manager at Calvert Investments in Bethesda, Maryland, which oversees more than $13 billion in assets, said in a telephone interview. “They have taken steps that give investors comfort they aren’t content on being a zombie company and won’t make the same mistakes they made in the past.”