American General Financial Services, a subsidiary of the government-controlled AIG, is considering a plan to liquidate up to $10 billion in whole loans using the securitization market, investment banking sources told NMN.
The first part of that liquidation was revealed in a new regulatory filing where the company said it would securitize roughly $1.6 billion in subperforming and nonperforming whole loans — many of which are nonprime in quality — through Credit Suisse.
PennyMac, which is controlled by former Countrywide president Stan Kurland, is involved in the transaction as a servicer. At press time both CS and AIG declined to comment on the record.
Initially, CS will purchase the loans and then issue securities. In an SEC filing AGFS and "sellers" could reap net cash proceeds of up to $975 million. The transaction is expected to close by the end of July.
The company said it will use the cash to support its liquidity position and funding needs, "including the discharge of approximately $313 million of debt security obligations under an indenture dated Jan. 1, 1988 that are due during 2009."
