The Federal Reserve Bank of New York is considering selling assets in its Maiden Lane III LLC portfolio, which were assumed in the government bailout of American International Group Inc., the district bank said today.
“The change in the investment objective for Maiden Lane III reflects a strategic decision to explore possible sales of some of the assets in the portfolio in light of improving market conditions and the success of the Maiden Lane II sales,” Jack Gutt, a spokesman for the New York Fed, said in an e-mailed statement.
The New York Fed is seeking to accelerate the repayment of its loan to the Maiden Lane III vehicle after completing the sale this year of the assets in its Maiden Lane II LLC portfolio, another pool of debt assumed in AIG’s rescue. The central bank was owed about $9 billion under its loan to Maiden Lane III as of March 28, according to the New York Fed website.
AIG and the Fed have benefited from the rebound in mortgage-linked assets, such as those assumed in the bailout. The insurer may use proceeds from sales of Maiden Lane III assets to help buy back more stock from the U.S. Treasury Department, Josh Stirling, an analyst for Sanford C. Bernstein & Co., said in a note to clients today. AIG advanced 5.3 percent to $32.52 at 4:02 p.m. in New York, the most since February.
“The Fed will only transact if it deems that a particular transaction represents good value, is done competitively and is not market disruptive,” Gutt said. No auctions were announced.
After selling the last group of bonds in the Maiden Lane II pool in February, the New York Fed said that taxpayers earned $2.8 billion on their $19.5 billion loan to that vehicle. It was created in 2008 to buy holdings that AIG handed the Fed in exchange for a cash injection.