It was said that American International Group's $596.4 million deal via Goldman Sachs was pulled due to a lack of confidence in AIG as the servicer following the Hollywood Funding debacle (see ASR 3/19/01).

The deal, called AIG Credit Premium Finance Master Trust 2001-1, was backed by commercial loans to corporations financing their AIG-issued insurance premiums.

Investors said official word from Goldman and AIG was that "market conditions" forced the deal to be pulled. However, investors quipped that market conditions couldn't be any better and far more complex transactions have been completed, but this was about the servicer risk.

"To be fair, AIG is a triple-A-rated company, so for them, anything but a tight pricing is unpalatable, and they didn't want to be held hostage when they could easily fund themselves in the ABCP market," commented one banker involved in the deal. The banker added that the deal might have been able to fly if it were offered in the low 20s.

"If the spread on the deal was Libor +50-60 basis points, it might have gone off, but the high-teens over Libor AIG was offering was not enough to warrant the risk of having them as servicer," said one U.S. conduit manager who turned down the deal. "This is the first boycott by ABS investors I have seen for a few years."

The senior-subordinate deal had two tranches rated triple-A and single-A. This would have been the third time AIG has used the structure since 1998. Bank of America was a co-manager along with Salomon Smith Barney.

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