Today In Lehman Brothers Rumors

Posted by John Carney, Jun 05, 2008, 10:53am

So here's what everyone is chattering about right now. Lehman Brothers is supposedly set to raise $5.5 billion from sovereign wealth funds. The deal is said to be split between common and preferred or hybrid shares. Lehman isn't talking right now but there's a lot of weird specificity about this, including the word that some of the money is coming from the Development Bank of Singapore.

This is definitely in wild rumor territory. No one we spoke to could trace this back to a credible source. But that isn't stopping anyone from talking about it.

Lehman is up about 4.5% today. This morning Deutsche Bank analyst Mike Mayo upgraded his rating on the stock. But the rumors and drip-drip-drip news out of Lehman has been causing a lot of chaos. Merrill Lynch's Guy Moszkowski downgraded the stock on Monday and then upgraded them on Wednesday.

And now Bernstein Research analyst Brad Hintz has lowered his earnings expectations for Lehman, warning that some of Lehman's counterparties are limiting trading with Lehman due to concerns about its capital and leverage and a recent credit rating downgrade.

Update: For clarification sake, we'll add that Hintz's comments about trading limitations are mostly, well, limited to derivatives trading. People are stilling buying and selling stuff like stocks and corporate bonds through Lehman.

0Recommend this! 12Comments
Posted in: Lehman

Comments

Posted by guest, Jun 05, 2008 11:11AM

To clarify my earlier post, DBS is 28% owned by the govt of singapore
s75

Posted by guest, Jun 05, 2008 11:13AM

Yeah, negative ratings migration and the fact that the derivatives subs are unregulated = less derivs business for lehman but all the major financial institutions are doing business with the primary bd, at least the ones i have talked to.
s75

you should read hintz's note if you want to know more.

Posted by guest, Jun 05, 2008 11:13AM

Yeah, negative ratings migration and the fact that the derivatives subs are unregulated = less derivs business for lehman but all the major financial institutions are doing business with the primary bd, at least the ones i have talked to.
s75

you should read hintz's note if you want to know more.

Posted by guest, Jun 05, 2008 11:36AM

"weird specificity" = excellent.

***
I'm not trading currently, having been relegated to a back office slot (it's about career mismanagemnt, not my track record, just to get that straight), but I gather Lehman's been a barrel of fun lately.

Posted by guest, Jun 05, 2008 11:45AM

"Traders limiting trades"

is exactly what happened to Bear. Bear traders were standing there scratching their heads wondering why no one would trade with them and everyone was running away.

But what's happening with LEH is nothing like BSC...

Posted by guest, Jun 05, 2008 12:12PM

Check out this interesting snippet of LEH Scandal/Gossip/Tattle:

http://nakedshorts.typepad.com/nakedshorts/2008/06/lehmans-criminal-cover-up.html

Posted by guest, Jun 05, 2008 1:23PM

12:12
I always wondered what became of Kenny Rogers.

Posted by guest, Jun 05, 2008 1:32PM

what's your source on the possibility of foreign investment? hopefully not the same as the info your pulled off of WSO for the JPM summer analyst full time offers.

is this source a bit more credible, or also a 23 yr. old college grad looking for a job?

Posted by DrederickTatum, Jun 05, 2008 2:21PM

5.5 Billion? Really? Its difficult to say whether that's too much or not nearly enough.

If your inclined to believe Lehman's company line that "All is well," then 5.5 Billions seem like a ton given that Lehman's paltry write downs.

If your inclined to believe Einhorn (and increasingly I am), there's not way tell if 5.5 billion is even close to being enough.

Posted by guest, Jun 05, 2008 9:58PM

The Singaporeans are not known for philanthropy. Neither are the Koreans.

I would not be surprised if Lou Jiwei ,the Head of China Investment Corporation, is sent to Xinjiang to do ten years of hard labour after the disastrous investments into Blackstone and Morgan Stanley.

If Warren Buffett starts buying shares in brokerages, let me know.

Post Your Comment