American International Group's failure to complete the sale of its aircraft leasing business to a consortium of Chinese financial institutions would result in "additional uncertainty" regarding the lessor's future strategic direction, according to Fitch Ratings.
"This could pressure the rating outlook in the near-term and potentially the ratings longer-term," says Fitch in a ratings note.
If the sale failed to close, AIG "may take steps to otherwise facilitate the sale of all or part of the unit, which may not necessarily be in the best interests of ILFC's bondholders", says Fitch.
Fitch admits several recent M&A deals in the aircraft leasing sector have had "relatively attractive valuations". However, Fitch believes the "size, age and diversity" of ILFC's fleet has limited the number of potential options available to AIG.
In December 2012, AIG entered into an agreement to sell a majority stake in its wholly owned subsidiary, ILFC, to a consortium of Chinese financial institutions. According to the original purchase agreement, the transaction was initially scheduled to close in May 2013, but has since been extended twice, with a current closing date of 31 July.
According to Fitch, the sale would value ILFC at $5.3 billion, "which is a material discount to the current book equity value of $8 billion".