Posted on 06/28/2008 2:03:55 AM PDT by TigerLikesRooster
Merrill may write down $5.4 billion in Q2: Lehman
By Elinor Comlay and Tenzin Pema
Fri Jun 27, 9:45 AM ET
Merrill Lynch & Co (MER.N) will likely incur $5.4 billion of write-downs in the second quarter, mainly from its exposure to bond insurers, said an analyst at Lehman Brothers.
The report, coupled with a discussion of the write-downs on CNBC, prompted Merrill stock to fall 2.5 percent to $32.23 and highlighted concerns the broker may need to raise capital.
Lehman analyst Roger Freeman raised his write-down view by $3 billion for Merrill, making his estimate the highest among Wall Street analysts. Analysts have to date expected write-downs to range from $3.5 billion to $4.2 billion.
Merrill is likely to have to raise capital if it does write down these positions, because the charges will leave Merrill Lynch with low capital levels relative to the industry, said Brad Hintz, analyst at Sanford C. Bernstein.
Raising capital may also be necessary to maintain credit ratings, Hintz said. Standard & Poor's cut Merrill's debt rating one notch earlier this month.
"Merrill does not want to see their rating go down again," Hintz said.
But Merill Lynch Chief Executive John Thain may find raising capital difficult, Hintz said.
(Excerpt) Read more at news.yahoo.com ...
Link to the April article:
Ping!
Now, how much does Merrill say Lehman will write down?
Apparently Lehman is whistling past the graveyard.
All of these write downs keep adding up to additional market problems.
Ah! the pigs are ratting each other out! “See, they are worse than we are. Sell their stock, not ours. Pretty please?”
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