NEW YORK (Bloomberg) — Investors should buy American International Group Inc.'s shorter-term notes, yet remain "cautious" on the insurer's longer-term debt because of the expense of a government loan deal, JPMorgan Chase & Co. said.

AIG, the insurer that agreed to be placed in a government conservatorship in exchange for an $85 million loan, will pay interest on the debt in the range of $10 billion for the first year, JPMorgan analysts said in a report yesterday. The insurer ousted CEO Martin Sullivan on June 15 and his replacement, Robert Willumstad, left three months later as part of the US takeover.