AIG owes USD 10b over soured trades

American International Group Inc. (AIG) owes financial firms about USD 10 billion for speculative trades that have turned sour.

Citing unnamed sources, the Wall Street Journal reported in its online edition on Tuesday that the trades had not been explicitly discussed with the investors and are not covered by the USD150 billion government rescue package awarded to the firm in November.

The report said the speculative trades indicate that the group – once the world’s largest insurer – might be faced with more serious problems with respect to clearing its debts.

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An AIG spokesman, however, has denied the report and told the Journal that the trades were not speculative bets but ‘credit protection instruments’. He added that the trades have already been fully disclosed.

The USD 150 billion rescue package came less than two months after AIG was forced to a USD 85 billion loan which made the government the holder of 79.9 percent of the company’s stake.