Shares of Lehman Brothers Holdings were down as much as 48% in intraday trading today amid fears the fourth-largest U.S. investment bank and a big player in the mortgage securities market might face liquidity problems akin to those that caused the fall of Bear Stearns Cos.
Lehman shares set an intraday low of $20.25 today, a level not seen since 2000. The stock had closed at $39.26 on Friday, when it lost nearly 15%, and had set a 52-week high of $82.05 on June 20, 2007. Shares closed down 19.13% at $31.75.
In a statement, Lehman said its cash position “continues to be very strong,” a view supported by several analysts.
“Lehman is not Bear,” analyst Mike Mayo at Deutsche Bank Securities said in a research note issued today to clients. Mr. Mayo added that Lehman at the end of last year had “$98 billion available for liquidity or $70 billion more than needed for $28 billion of unsecured short-term debt.”
Mr. Mayo also noted that Lehman has $180 billion in repurchase agreements lines and received a $2 billion credit line from 40 banks.
Credit rating agency Moody’s Investors Service also reaffirmed Lehman’s investment-grade A-1 rating on the firm’s senior long-term debt but lowered its outlook to “stable” from “positive,” citing “strong headwinds” facing its core business. Lehman is expected to report its first-quarter earnings Tuesday morning.
