psst....AIG is selling their American General Unit to Fortress - 80% of it.
XFP hasn't budged this am until I bought 3500 shares. Third party trust preferreds for American General. I am going out on a limb here but I think these TPTrups will now go with American General and could go higher towards their par value of $25 now that Fortress is buying.
Specifically note these two comments: "Debt prices are signaling that bondholders believe Fortress will try and do a debt restructuring"
"The gap between swaps on American General and AIG widened 340 basis points to 604 basis points, CMA data show."
If AIG was still guaranteeing the debt, Fortress would go nowhere in trying to restructure the debt. Bondholders would simply say "No, thanks" to a haircut because AIG would be on the hook if Fortress defaults. Yet the drop in American General bond prices show that investors believe a restructuring is likely.
Even more clearly, the substantial spread between AIG and American General CDS spreads show that these debts are not even close to equivalent risk.
P.S. American General 6.9% senior due 2017 has a YTM of about 11% today. XFP, which is subordinated and due in 2045, has a YTM less than 10%. (XFP's sister, MKS, has YTM less than 9%). Why would you buy the subs instead of senior???
If they go with American General they may not be traded anymore, this is common, and has happened before with other preferreds, you still get paid but near impossible to sel, and if they bankrup the company you will not get paid at all, this happened with a reit preferred for CARS, and KPA, so good luck