Moody's Investors Service downgrade Monday of American International Group Inc. may have a negative impact on 147 triple-A rated local housing finance agency transactions that have exposure to AIG through guaranteed investment contracts, Moody's said yesterday.

Moody's downgraded AIG's long term rating to A2 from Aa3 and placed its short-term P-1 rating on its watch list for possible downgrade.

The list included certain bonds from the Allegheny County Residential Finance Authority to the West Central Texas Regional Housing Finance Corp.

Standard & Poor's on Monday lowered the beleaguered insurance company's long-term counterparty rating to A-minus from AA-minus and its short-term counterparty credit rating A-2 from A-1-plus. Standard & Poor's also lowered its financial strength ratings on most of AIG's insurance operating subsidiaries to A-plus from AA-plus. Fitch Ratings downgraded AIG to A from AA-minus.

AIG shares closed down 17.02% at $3.95 yesterday.

AIG has come under strain from its exposure to credit default swaps and its holdings of residential mortgage-backed securities. The company was in talks yesterday with Federal Reserve officials on finding enough to stay afloat, according to media reports.

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