Standard & Poor's Ratings Services said it has placed onCreditWatch with negative implications the ratings of 25 housingbond issues partially supported by guaranteed investment contracts(GICs) from certain American International Group companies.

Standard & Poor's said it examined all housing bond issueswith partial credit support by American International Group, AIGMatched Funding Corp., or AIG Financial Products Corp. "For thelocal issuers, Standard & Poor's looked at the issue's relianceupon return of principal and investment earnings to meet bondpayment obligations," the rating agency said.

Should those issuers act to replace or guarantee the existingagreements, Standard & Poor's said, or if they can demonstratethe ability to make bond payment obligations without relying on theinterest earnings on the GIC, ratings will be reviewed upon theissuer's request.

This action follows Standard & Poor's Oct. 3 placement ofAmerican International Group Inc. on CreditWatch with negativeimplications.

Standard & Poor's looked at the parity resolutions for eachstate housing finance agency (HFA). The rating agency said itexamined whether cash flows are strong enough to absorb lower ratesof return if the AIG GIC is terminated.

"Based on our review, Standard & Poor's has not taken ratingaction for these programs," Standard & Poor's said.

Standard & Poor's analyst Valerie White said, with respectto the parity resolutions, that the rating agency looked at anumber of factors, including the financial strength of theresolution as a whole, the maturity date on the GICs, and how theHFA is going to manage its exposure.

"So we looked at each and every parity resolution that had AIGexposure, and we came to the decision that at this point right now,we didn't need to take any action on the parity resolutions," shesaid.

The rating agency added that it placed the affected HFA conduitissues on CreditWatch with negative implications pendinginformation from the HFA on what, if any, action it will take.