OREANDA-NEWS. Rising shareholder pressure is inching credit default swap (CDS) spreads for American International Group (AIG) to levels not seen since 2014, according to Fitch Solutions in its latest CDS case study snapshot.

Five-year CDS on AIG have edged out 55% since the start of the year. CDS on AIG underperformed the broader North America financials industry (spreads 20% wider since the start of the year).

'The market is pricing in increased credit default risk for AIG amid pressure from shareholders to break the company up,' said Director Diana Allmendinger. AIG's investor presentation today reiterated that the company plans to maintain its multi-line insurance profile as a breakup would reduce diversification benefits from a capital adequacy perspective and the ability to fully utilize existing deferred tax assets.

Whether greater certainty of AIG's strategic intentions will result in a narrowing of CDS spreads to prior levels will bear further watching.

Fitch Solutions case studies build on data from its CDS Pricing Service and proprietary quantitative models, including CDS Implied Ratings. These credit risk indicators are designed to provide real-time, market-based views of creditworthiness. As such, they can and often do reflect more short term market views on factors such as currencies, seasonal market effects and short-term technical influences. This is in contrast to Fitch Ratings' Issuer Default Ratings (IDRs), which are based on forward-looking fundamental credit analysis over an extended period of time.