NEW YORK, Sept 10 Lehman Brothers LEH.N will
have to complete a transaction such as sale of a majority stake
in the firm, or the entire company, to avoid a rating
downgrade, Moody's Investors Service said on Wednesday.
The bank will also need to take further action beyond the
steps it announced on Wednesday to avoid a ratings cut, Moody's
analysts said on a conference call.
Lehman sought to restore investor confidence on Wednesday
with plans to sell a majority stake in its asset management
unit and spin off commercial real estate. For details, see
Moody's said it would have downgraded Lehman's debt rating
earlier on Wednesday, likely to the "triple-B" category, if it
did not think a transaction was possible. Any deal would have
to calm markets to preserve the ratings, the agency added.
Raising capital alone would also not preserve Lehman's
rating, now "A2," as the firm suffers a crisis of confidence,
"Capital is one element but obviously confidence is a key
element," said Bob Young, a team managing director at Moody's.
The rating agency on Wednesday put Lehman's ratings under
review with the direction uncertain, citing the fluidity of the
Moody's added on the conference call that it believes
Lehman has ample liquidity to post additional collateral
against its derivative positions, were it required by a
downgrade of its credit rating. Collateral postings are also
not usually the largest drain on a bank's capital, Moody's
(Reporting by Dena Aubin and Karen Brettell; Editing by Leslie