NEW YORK (Bloomberg) - American International Group Inc.'s (AIG) draw on a Federal Reserve credit line surged for a fourth week to the highest since May after the insurer paid down a commercial paper facility and propped up its airplane unit.

AIG owes $44.8 billion on the line, about $3.6 billion more than last week, according to Federal Reserve data released on Friday. The increase in the Fed line stemmed from paying down the US commercial paper facility as those borrowings matured, said Mark Herr, an AIG spokesman, in a telephone interview. AIG made $1.1 billion in payments to the Fed line this week, Mr. Herr said.

"This is a rebalancing of our various government borrowings, rather than a true increase in government debt," Mr. Herr said. "While the Fed balance has increased, there's been a corresponding decrease in the borrowings under the commercial paper programme."

AIG, bailed out in September 2008 with a package that has ballooned to $182.3 billion, also tapped the Fed line for $2 billion this month to prop up its International Lease Finance Corp. (ILFC) unit after a bank loan facility expired, the plane leasing subsidiary said in a filing on October 19.

ILFC had typically funded airplane purchases by borrowing in the short-term commercial paper market until AIG's government rescue. Credit downgrades tied to the insurer's near-collapse cut off that source and forced AIG CEO Robert Benmosche to step in about two weeks ago while he seeks to sell ILFC as part of a plan to repay the US.

"AIG had to turn to its lender of last resort, the Federal Reserve Bank of New York in order to pay off a $2 billion bank loan that matured," said Kathleen Shanley, an analyst at debt rating firm Gimme Credit LLC, in an October 20 note. The payment "puts off the problem of what to do with the rest of ILFC's debt for another day".

The Fed may have to "apply more moral suasion" to get the remaining users of the Commercial Paper Funding Facility to exit the government program before it expires in February, Joseph Abate, a money-market strategist at Barclays in New York, said in an August report.

AIG's bailout includes access to a $60 billion Fed credit line through 2013. The rescue also includes an investment of as much as $69.8 billion from the Treasury, and up to $52.5 billion to buy mortgage-linked assets owned or backed by the New York- based insurer.