Man talk about a way to start out the new quarter. We haven't even opened up for trading tomorrow and the news flow after the bell is just awful for tomorrow's setup.
First Lehman reports they are offering $3 billion in preferred convertibles to raise capital to "reassure investors it has ample access to capital." Yeah so they don't need it and will dilute the common equity holders just to point out they can get it. Please.
http://www.reuters.com/article/marketsNews/idUKWEN472720080331?rpc=44
The deal terms seem pretty good.
Lehman Brothers Holdings Inc's $3 billion of convertible preferred shares are seen having a dividend of 7 percent to 7.5 percent and a conversion premium of 30 percent to 35 percent, according to people familiar with the deal.
Right after that though Moody's downgrades ratings on 270 trances from 27 Alt-A transactions issued by Lehman XS Trst Series.
http://news.moneycentral.msn.com/provider/providerarticle.aspx?feed=BCOM&date=20080331&id=8413129
I think these downgrades were annouced after the preferred deal was annouced. If someone knows differently let me know. Anyway Lehman was down 2.25% after the bell even after everyone was "reassured it has ample acces to capital."
Here is a question for you, when has the first request for capital by the financial firms every worked for investors in this current crises? Anyone? First Marblehead, Ambac, MBIA, Citigroup, Merril Lynch, Washington Mutual, etc. etc. etc.
Oh here is another for you, UBS which raised billions in capital. Guess what other news hit after the bell? (once again I think this news technically hit after the bell, I didn't see it during the trading day)
http://www.ft.com/cms/s/0/5bc18e5c-ff4c-11dc-b556-000077b07658.html?nclick_check=1
UBS is poised to reveal further writedowns of up to $18bn and seek a capital increase of about SFr13bn ($13.1bn) only weeks after shareholders approved a similar-sized injection from outside investors.
Yep, the conservative Union Bank of Switzerland after writing down $18 billion dollars last year and raising billions in capital will be holding out its hand again begging for billions more as it starts seeking capital.
Seems like investors would learn. Part of the optimism that is still permeating the market.
Market may be able to digest all this for tomorrow but looks ominous to me. However, we digested Bear Stearns total collapse to be able to finish up for the month of March in the broad indexes.
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4 comments:
Well, that Lehman Brothers issue is priceless!
As a sign of how well we are doing, as proof that we do not need any capital, we are going to raise some more capital.
Amazing, not even a politician could say something like that and keep a straight face.
I would guess that it means Lehman is in serious trouble - it really seems a bad sign.
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