(Adds Fitch downgrade, quotes)
LONDON, Sept 15 Moody's Investors Service cut
its ratings on Lehman Brothers Holdings Inc LEH.N deep into
"junk" status on Monday, while Fitch Ratings downgraded it to
default after the group filed for bankruptcy protection.
Moody's cut its ratings on the senior debt and some
guaranteed subsidiaries of Lehman Brothers Holdings, the parent
of Lehman Brothers Inc, by 10 notches to B3 from A2. It also cut
the group's subordinated debt to Caa2 from A3 and its preferred
stock to Ca from Baa1.
"Today's rating action follows the collapse in market
confidence in the firm, and Lehman's announcement that it was
filing for Chapter 11 bankruptcy protection after its failure to
reach a merger agreement with a stronger strategic partner,"
Fitch cut its long-term and short-term issuer default
ratings on Lehman Brothers Holdings and other subsidiaries to
default or "D", its senior debt to CCC from A+, and its
subordinated debt and preferred stock to C from A.
An orderly liquidation should provide substantive cash for
recovery at the senior level, Fitch said, but the credit rating
agency expects "limited to no recovery at the subordinated and
preferred debt levels at Lehman Brother Holding Inc.".
Moody's had placed the firm on review with direction
uncertain on Sept. 10 after the deterioration in Lehman's
situation, but said Lehman's credit deterioration had "been far
sharper than anticipated" since then.
It slashed the senior long-term rating of Lehman Brothers
Inc by 9 notches to B1 from A1 and its subordinated debt to B3
from A2. Short-term ratings on all Lehman entities were cut to
Not-Prime from Prime-1.
Moody's said it may cut all Lehman long-term ratings again,
placing the debt on credit watch negative.
Fitch said its ratings on subsidiaries will likely be
downgraded as more information becomes available. Fitch believes
Lehman Brothers Inc may continue to operate for some time,
although eventual default remains a "real possibility".
(Reporting by Natalie Harrison; Editing by David Holmes and