Moody's Investors Service downgraded the debt rating of American International Group and two of its operating units, saying the company's plan to sell assets may not raise enough capital to pay back its $85 billion government loan.

The New York-based rating agency said Friday there is a risk because there could be "shortfalls in executing the restructuring plan or because of declines in the business or financial profiles of the operation to be retained."

Because of the downgrade, two other units were affected: American General Finance Corp. (AGFC) and International Lease Finance Corporation (ILFC).

Moody's lowered AIG's senior unsecured debt rating from "A2" to "A3" and said the long-term ratings and the company's Prime-1 short-term rating remain under review for possible downgrade.

AGFC's senior debt rating was downgraded from "A3" to "Baa1." AGFC's long-term ratings remain under review for possible further downgrade.

The short-term ratings for AGFC, as well as the backed-commercial paper rating for Como LoCo Inc., were affirmed at Prime-2: outlook negative.

The Prime-2 short-term rating of AGFC'sdirect parent, American General Finance Inc., was placed on review for possible downgrade.

Moody's action reflected not only the AIG downgrade but also AGFC's "erosion in the company's stand-alone credit profile and operating outlook."

AIG's ILFC, which is in the aircraft leasing business, had its senior unsecured rating downgraded to "Baa1" from "A3" and affirmed its Prime-2 short-term rating. The company's long-term and short-term ratings are under review with direction uncertain.

Moody's made the move based on the lack of financial support AIG will be able to give the unit and the uncertainty over future ownership.

The rating service issued its downgrades late Friday after AIG Chairman and Chief Executive Officer Edward M. Liddy announced that same morning that the insurer plans to maintain its U.S. property-casualty and foreign general insurance units and keep a majority interest in its foreign life insurance unit, but everything else was on the table for sale.

AIG is selling the units to pay back an $85 billion bridge loan from the Federal Reserve Bank as quickly as it can.

AIG secured the loan and gave the government a 79.9 percent interest in the company after it could not find capital in the private sector. AIG hit a liquidity crunch over its subprime mortgage related investments that have suffered in value and required heavy amounts of collateralization which has drained its financial position.

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Moody's Downgrades AIG

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