Lehman's stock is down 44% to $8 after Korea decided not to bail out the firm. CEO Dick Fuld had months to put together a smart package to save Lehman, and now it seems he has dithered too long. Based on the current price, the market appears to be assuming he won't be able to sell Neuberger, either. (And if you were considering buying it, wouldn't you just wait a couple more weeks?)
Meanwhile, Standard & Poor's is weighing cutting Lehman Brothers (LEH) debt rating following the plunge in the bank's stock price today. The ratings agency says that it is concerned about Lehman's future ability to raise more capital. (What took so long?) Reuters:
S&P said it cannot rule out cutting Lehman's ratings by more than one notch. A two-notch downgrade would cut Lehman's current "A" rating, the sixth-highest investment grade, to the "triple-B" range.
Doubts about whether Lehman can raise more capital are based on the "precipitous decline in its share price in recent days," S&P said in a statement.
Lehman's capital ratios appeared adequate as of May 31, but S&P said it now believes the company incurred a substantial net loss in the third quarter because of difficult investment-banking conditions and write-downs from mortgages and related securities.
"We continue to view Lehman's near-term liquidity as satisfactory, however," S&P said.
The turmoil surrounding Lehman now has a very distinctive Bear Stearns feel to it.
