NEW YORK - American International Group Inc, the insurer bailed out by the U.S. government, has extended $2 billion in credit to its aircraft leasing arm, allowing the lessor to meet debt obligations due last week, according to a regulatory filing on Monday.

International Lease Finance Corp, or ILFC, said it entered into the new $2 billion credit agreement with AIG on Oct. 13 in a filing with the U.S. Securities and Exchange Commission.

AIG was able to draw the funds for ILFC from a credit facility established by the Federal Reserve Bank of New York at the time of AIG's federal rescue in September 2008.

The proceeds of the new credit facility were used by ILFC to repay its obligations under a five-year $2 billion credit agreement with Citicorp and other financial institutions due Oct. 15, it said in the filing.

ILFC said it has secured the loan from AIG with a portfolio of aircraft, equipment and leases.

The new credit agreement was put in place as AIG and ILFC's CEO Steven Udvar-Hazy have been holding talks to sell a small part of the unit's portfolio of commercial aircraft to an investor group being led by Udvar-Hazy.

AIG has been considering the sale as a way to help deal with ILFC's liquidity problems, a source told Reuters last week.

The troubled insurer, which got billions of dollars in federal support after mortgage losses left it on the verge of collapse last year, had been trying to sell ILFC in entirety but called off the auction in recent months.

Selling Los Angeles-based ILFC has proved a challenge due to its mountain of debt and funding needs. ILFC had roughly $32 billion of total debt financing and subordinated debt as of June 30.

A combination of factors, including problems faced by AIG and ratings downgrades, has left ILFC unable to issue commercial paper and unsecured debt since the third quarter of 2008, according to an SEC filing in August.

AIG shares closed down 4.7 percent at $41.17 on Monday on the New York Stock Exchange.

(Reporting by Lilla Zuill; Editing by Phil Berlowitz)