Whitney Comments On Capital Raising By Lehman,Others

Discussion in 'Wall St. News' started by Cdntrader, Apr 2, 2008.

  1. Whitney Comments On Capital Raising By Lehman,Others

    Lehman is selling shares ahead of what will probably be a ``barn rush'' of firms trying raise capital this year, Oppenheimer & Co. analyst Meredith Whitney wrote in a report. ``While this capital raise is expensive on a near-term historical basis, it will only get progressively more expensive to raise capital as the year evolves.''

    Conversion Price

    The convertible preferred shares have a coupon of 7.25 percent, Lehman said. The conversion price is $49.87, compared with $37.64 at the close on the New York Stock Exchange yesterday. Lehman rose $3.21 to $40.85 in 10:03 a.m. composite trading, after reaching $41.62.

    UBS AG, Europe's biggest bank, said today it's seeking a cash infusion of 15 billion francs ($15 billion) to rebuild capital after a 12 billion franc quarterly loss linked to subprime mortgages. Deutsche Bank AG, the largest bank in Germany, will write down 2.5 billion euros ($3.9 billion) in loans and asset-backed securities as a result of subprime investments gone bad, the Frankfurt-based company said.

    While many investors were expecting writedowns to be concluded in last year, first-quarter results are proving to be a disappointment, Oppenheimer's Whitney said. Banks will have to raise more capital to cope with further value reductions of their portfolios, she said.

    `Rude Awakening'

    ``Another rude awakening will likely be the need to refocus on capital ratios of the financials as net losses wipe out a material portion of new equity raised in the past three months,'' Whitney wrote in a report today.
  2. if the stock ever gets up to the conversion price, they short the common and buy the convert. for a free look at the yield

    they used to pound on Lucent whenever it had to issue paper and it never recovered.