Equity Conversion Plan

AIG, who has taken a beating on mortgage-related insurance bets may need to raise an additional $10 billion in cash on top of the recently-raised $20 billion in order to keep its rating.

From Bloomberg on AIG’s cash needs:

AIG may seek $5 billion to $10 billion rather than let its credit ratings be cut again and risk higher borrowing costs and lower sales, Shanker said yesterday in a research note. Standard & Poor’s, Fitch Ratings and Moody’s Investors Service downgraded New York-based AIG this month after the company posted a $7.81 billion first-quarter loss.

“The ramifications of another downgrade would be devastating,” Shanker, who rates AIG “hold,” said in a note published after the close of regular U.S. markets. “A downgrade would be so detrimental to AIG that it will not allow this to happen.”

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New home sales rose for the first time in sixth months but the sales gain was merely a rebound from the 11% loss reported in March - the lowest level in sales in nearly 20 years. Last month’s sales numbers were off 42% from the same time period in 2007 the biggest drop since 1981.

From Market Watch on the newest new home sales figures:

Sales rose 3.3% in April to a seasonally adjusted annual rate of 526,000, marking the first gain since last October, the Commerce Department reported Tuesday.

Economists said the sales gain was a rebound from the sharp 11% drop in sales in March to 509,000 units, which was the lowest level in sales since April 1991.

By region, sales jumped in the Northeast and rose slightly in both the Midwest and West. Sales were down in the South.

Underscoring the fragile state of the market, last month’s sales were down 42.0% compared with April 2007, the biggest decline since September 1981.

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