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HighlyConfidentialNewYorkFedInformation
LEHMAN
18
UPDATE
J{2+L}:F.R.
Restricted
9/12/2008
DiscussionwithTreasurerandDataforSeptember
11
(SeeAppendixforrecentdays'narratives).HoldingCompanyLiquidityPool:
Theliquiditypoolclosedat$34B,downfrom$37.6Bthepriorday.TheTreasureracknowledgedthereductiontobeprincipallyfrom:-$1.3BtocovertheoperationalshortfallatLBIE,theUKbroker-dealer,tocoverongoingprimebrokerpullouts-$800milliontocoverderivativesoutflows(including$690million
in
additionalmargincollateralpostingstosupportnovations,
DeutscheBank
requiringthelargestamount)(Notetheseadditionalpostingsareexpectedtobereturneduponcompletion
of
theunderlyingnovations.)-$1.6Bloanfunding
CommercialPaper:
Outstandingbalancesclosedat$2.6Byesterday,upfrom$2.4B.Today,$341millionmaturing
in
theUSdidnotroll,bringingbalancesto$2.1
B.
Thisincludedtranchesheldby
AbuDhabiInvestmentAuthority
($285million),
Metro
Water
Authority
($34.5million)and
SanMateoCounty
($20million).
LessLiquidRepo:
Balancesdecreasedto$85.8Bfrom$87.0Byesterday.Twobalancesdidnottorolltoday:$1.3B
of
equityrepowith
Fidelity
(itsremainingrepobalancewithLehman)and$200millionequityrepowith
Bank
of
Tokyo.
TheTreasureranticipatesthattherepooverfunding
in
placewillallowcurrentbalancestoberetained.(Totaloverfunding
is
$13B,downfromthe$15Breportedyesterday.)
t
DebtBuybacks:
Lehmanpurchased$20milliontoday.TheTreasureraddedthatLehman'sdebtbuybackprocesshasbeenvirtuallyshutdown.
CDS
Spreads:
Spreads,whichfinishedyesterdayat540,openedat565andwidenedto650atmid-morning.
Open3.8401-YrReturn-93.233%AskN.A.52-WeekLow3.54(09/12/08)BidN.A.52-WeekHigh67.73(11/14/07)%Change
-10.900
Low3.540Change
-0.460
High4.050olume140,729,216
Clearing
Bank
Balances:J.P.Morgan
askedforanadditional$5B
in
intradaydepositstocoverclearingactivities,bringingtheoverallbalanceto$15B.
11
:53StockPricePrice3.760
RatingsAgencyDevelopments:
TodayStandard
&
Poor'schangeditsCreditWatchListingtoDeveloping.Standard
&
Poor'shadplacedLehmanonCreditWatchNegativeearlierthisweek.
1
FRBNYtoExam.007943
 
LEHMAN
18
UPDATE
J{2+L}:F.R.
Restricted
S&PrevisesLehmancreditwatch
to
developing:
9/12/2008
Sept12(Reuters)-
Standard&Poor'sRatingsServicessaidtodaythatitsratings,
includingthe'A'long-termand'A-1'short-termcounterpartycreditratings,
onLehmanBrothersHoldingsInc.andratingsonallrelatedentitiesremainonCreditWatch,
wheretheywereplaced
on
Sept.
9,
2008;
however,werevisedtheCreditWatchlistingtodevelopingfromnegative.
TheCreditWatchdevelopingmeansthat
we
couldraise,affirm,orlowertheratings.
On
Sept.10,2008,whilepre-announcingitslargethird-quarterlossanddisclosingvariousplannedactionstoreduceitsholdings
of
problematiccommercialrealestateandresidentialmortgageassets
and
toshore
up
itscapital,Lehmanalsostatedthatthefirmwascommittedtoexaminingallstrategicalternativestomaximizeshareholdervalue.Pressreportsoverthepastday,whichhavenotbeencommented
on
byLehman,haveindicatedthatit
is
negotiatingwithotherfinancialinstitutionsregardingthepotentialsale
of
thecompany.
IfLehmanwereto
be
acquired,wecouldraisetheratings,
withtheextent
of
theupgradebeingdependent
on
ourassessmentof:--Thecreditquality
of
thecombinedcompany;--Theacquirer'sbusinessstrategywithrespecttoLehman;and--Thestructure
of
thetransaction,includinganyformalsupportextended
by
theacquirertoLehman'sdebtandotherobligations.Aspart
of
ourreview,wewouldalsotakeaccount
of
specialsupportextendedbytheFederalReserve,
if
any.
Barringatakeover,Standard&Poor'swouldcontinue
to
reviewLehman'sratingsforapotentialdowngrade,
based
on
theconcerns
we
expressedpreviouslyregardingLehman'slong-rangeprofitpotential,itsexposuretoproblematicassets,
and
itscapitaladequacy.(SeeourresearchupdatesdatedSept.
9,
2008,
and
Sept.
10,
2008.)
In
that
case,whileitispossiblethattheratingscouldultimately
be
affirmed,
it
is
morelikelytheratingswould
be
lowered,possiblybyseveralnotches.
CURRENTRATINGS
•
Short-term
P-1P-1
•
September2008PlacedonReviewwith
DirectionUncertain
•
July2008LTRatingsDowngraded.(Outlookremains
Negative)
•
June2008PlacedonNegativeWatch
•
June2008Outlookchangeto
Negative
•
March2008OutlookChangedto
Stable
•
Long-tern(senior)A2
A1
•
Long-term(subordinated)A3A2
2
FRBNYtoExam.007944
 
LEHMAN
18
UPDATE
J(2+L):F.R.
Restricted
9/12/2008
•
Short-term
A-1A-1
•
September
2008
CreditWatchListing
Changed
from
Negative
to
Developing
•
September
2008Placed
on
NegativeWatch
•
June
2008LTRatingsDowngraded,
(Outlook
remains
Negative)
•
March2008
Outlook
Changed
to
Negative
•
Long-tern
(senior)AA+
•
Long-term(subordinated)
A-A
CiccC,
iiii
<iii<iiiii
,/I""I'I'",.n·.
///////////////////?//
••
/?///?
•
Short-term
F1F1
•
September
2008Placed
on
NegativeWatch
•
June
2008
LT
&
ST
RatingsDowngraded,
(Outlook
remains
Negative)
•
April
2008
Outlook
Changed
to
Negative
•
Long-tern
(senior)A+A+
•
Long-term(subordinated)
AA
•
c.....:.<
'.>i';?
]i
•
.....:.C.•
c..;,;,:?
•••
/i<>i
C,.....
IIUUL.u
.
.II1U
ii
••
?/
•
Short-term
R-1
(Middle)
R-1
(Middle)
•
September
2008LTRatingsDowngraded.
(Outlook
remains
Negative)
•
June
2008
Outlook
Changed
to
Negative
•
December
2007RatingsUpgraded
•
Long-tern
(senior)A(High)
AA
(Low)
•
Long-term(subordinated)
A(Middle)A(High)
3
FRBNY
to
Exam.007945

NY Fed - Lehman IB Updates (Aug. 15, 2008 – Sept. 11, 2008)

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