The Great Stock Hope (aka AIG) Gets a Lifeline

November 10, 2009 1:20 PM EST

American International Group, Inc. (NYSE: AIG) is higher today after comments from Moody's late yesterday which suggested that if markets continue to stabilize the company may be able to fully repay the government's senior secured loan and much or all of its preferred equity stake.

As would be expected, speculators have viewed this news as extremely positive. The thinking here is that if AIG can get out from under the government's thumb then the common shares could have some value. Until this report, speculation that the common would have value was based on just one thing - HOPE. Now that the hope is in writing, which gives it some credence. Something for longs to hold onto, nurture and cherish.

But analysts at Credit Suisse are saying not so fast. They claim the Moody's news is likely positive for AIG bondholders but that its not clear whether it is positive for the common equity. The firm claims that if AIG does have the wherewithal to payback the government, then there won't be much of an incentive for the government to restructure its deal with the company. Credit Suisse also highlighted Moody's caveat that the ratings could be lowered if they perceive a decline in realizable values.

Shares of AIG are up 4.45 percent to 37.72, but off the day's high of $39.35.

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