AIG & Prudential Said and Unsaid

AIG (AIG) sold is crown jewels to Prudential (PRU) Prudential needs to issue equity and debt. Prudential will now generate a majority of income from Asia specifically China. TARP funds will be paid down. Prudential needs to double its market cap to swallow the deal. Look for the silent hands of regulators stick handling this one through the markets.

Under any other circumstances if Prudential wanted to double its size overnight the regulators would have freaked. Under any circumstances if Prudential wanted to change its concentration from Europe to Asia overnight the regulators would have freaked.

The Chinese must have signed off on AIG selling to Prudential. Should be long term helpful for China’s foreign exchange position in US Dollars. Who will be the big buyers of Prudential equity? Why not China?

There is more unsaid about this deal than said.