UPDATE 1-AIG pays back $4 bln of U.S. loan

* Single largest repayment of Fed credit facility

* Repayment after ILFC sold $4.4 bln in debt

* Shares up 1.2 pct

NEW YORK, Aug 23 (BestGrowthStock) – Bailed-out insurer American
International Group Inc (AIG.N: ) said on Monday it paid back
nearly $4 billion in U.S. loans in its single largest cash
payment so far to reduce its debt to taxpayers.

The payment reduces the size of the Federal Reserve Bank of
New York’s credit facility by that amount to about $30 billion.
The outstanding principal balance, excluding fees and interest,
is now at just over $15 billion.

At $15 billion, the balance is at its lowest level since
the March 2009 restructuring of government aid, a source told
Reuters previously. A previous low of $17 billion was reached
in December after AIG gave the Fed preferred interest in two
special purpose vehicles created to hold its foreign life
insurance business. [ID:nBw235824a]

AIG, which is nearly 80 percent owned by the U.S.
government, was rescued in September 2008. Besides the Fed
credit facility, the U.S. Treasury Department holds about $49
billion in preferred shares that AIG must repay.

The Fed repayment comes after International Lease Finance
Corp, AIG’s aircraft leasing unit, sold $4.4 billion in debt to
investors and used the bulk of the proceeds to repay $3.9
billion in government loans.

AIG’s shares rose 1.2 percent to $35.60 during morning
trading on the New York Stock Exchange.
(Reporting by Paritosh Bansal, editing by Gerald E. McCormick

UPDATE 1-AIG pays back $4 bln of U.S. loan