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Friday, October 03, 2008

Moody's Cuts AIG Senior Debt Rating To 'A3' From 'A2'

Sue Chang

MarketWatch Pulse

SAN FRANCISCO -- Moody's Investors Service on Friday lowered American International Group's senior unsecured debt rating to A3 from A2. At the same time, AIG's long-term ratings and its Prime-1 short-term rating remain on review for possible downgrade. "Moody's believes that the asset sales plan announced today, if successful, will enable the company to repay borrowings under the Fed facility and emerge as a more focused, albeit less diversified, insurance firm," the ratings agency said. The review will take into consideration the risk that the situation may deteriorate, either due to shortfalls in executing the restructuring plan or because of declines in the business or financial profiles of the operations to be retained, according to Moody's.

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Word of the Day

Same-Store Sales

Most folks judge the health of a business by the revenue that comes in through sales. But not all revenue is equal. Companies can grow their sales by buying other companies, which means you don't get a clear view of how the real sales trends are moving.

So, many analysts, particularly those who look at retail, try to gauge what¿s known as "organic" growth, by looking at same-store sales. These are sales only at outlets open more than a year, so the metric can exclude any sales jump that comes from opening new locations. Retailers release same-store sales (which are frequently called "comps" since they're a true comparison from the previous period) every month.

Retail, incidentally, isn't the only industry to look at same-store sales. Hospital companies, also use the metric, to gauge how existing hospitals are performing compared to ones they just built or acquired.