Perhaps I am jaded, but consider:
1. Lehman leaks an internal memo to CNBC’s Charles Gasparino which says that the firm’s net leverage and liquidity are considerable better than that of Goldman and Morgan Stanley
2. Lehman is nevertheless looking to raise a lot of equity, most likely common at a price that would be dilutive
3. Neither the supposedly worse off Goldman and Morgan Stanley are out trolling for new capital
Actions speak louder than words…..
Lehman Brothers Holdings Inc., which some analysts expect will report its first quarterly loss since going public in 1994, may raise as much as $5 billion in capital by early next week, a person with knowledge of the matter said.
Executives at Lehman are in talks with at least one U.S. pension fund and an overseas investor on terms of a transaction, according to the person, who declined to be identified because the negotiations are confidential. A rights offering, in which existing stockholders would gain the right to buy shares at a discount, isn’t in the current plan, the person said. Mark Lane, a spokesman for the New York-based firm, declined to comment…
“We are buyers of the stock on the assumption that Chief Executive Officer Dick Fuld will steady the Lehman ship and, with greater stability, the stock will appreciate,” Deutsche Bank AG analyst Mike Mayo said. In a note to investors early yesterday Mayo said he expects Lehman to raise $4 billion of capital and post a second-quarter loss after $2.9 billion of credit-market writedowns.
Lehman raised $4 billion in April through a sale of convertible preferred shares to quell speculation that it was short of capital. In total the firm has raised $8 billion by issuing subordinated bonds and other types of securities.
Still, earlier this week rating company Standard & Poor’s cut its assessment of Lehman’s creditworthiness one level to A from A+ and said the outlook remains negative, noting that a downgrade would be possible if the firm were to incur “substantial losses.”…
Sanford C. Bernstein & Co. analyst Brad Hintz reiterated his “market perform” rating yesterday on Lehman. While the company won’t face “a life-threatening funding run,” investors should “remain on the sidelines until the firm demonstrates a reduction in leverage and lowers its exposures to troubled asset classes,” he wrote in a report.